India’s Private Sector Growth Slips In May As Geopolitical Tensions Weigh

Underlying data showed that a pick-up in growth across the service economy was offset by a weaker increase in factory production.

Finished goods stocks rose for a second consecutive month and stocks of purchases increased at the fastest rate in three months.

Source : Freepik

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Key points generated by AI, verified by newsroom

• India's private sector growth slowed slightly in May.
• Service sector expansion offset weaker factory production growth.
• New export orders saw a notably softer expansion.

Growth across India's private sector economy saw a marginal contraction in May amid the geo-political tensions, with HSBC Flash India PMI Composite Output Index standing at 58.1, compared to 58.2 in April, which signalled another marked expansion in private sector activity, it was announced on Thursday.

Underlying data showed that a pick-up in growth across the service economy was offset by a weaker increase in factory production.

After retreating in April, input price inflation ticked higher, but firms limited the pass-through of additional cost burdens to clients by lifting output charges to a lesser extent. Service providers outperformed manufacturers and experienced softer inflationary pressures.

“Manufacturing activity eased marginally as the rates of expansion in output and new orders moderated, while growth of new export orders softened markedly. Yet, the Manufacturing PMI remained broadly in line with its long-run average, supported by continued inventory building,” said Pranjul Bhandari, Chief India Economist at HSBC.

Finished goods stocks rose for a second consecutive month and stocks of purchases increased at the fastest rate in three months. Cost pressures intensified, with input prices rising at the sharpest rate since July 2022, she added.

According to the PMI data, new business placed with manufacturing companies and their services counterparts increase at softer rates in May, therefore dragging down growth at the composite level.

There was a notably softer expansion in new export orders across India's private sector economy in May, the weakest in 19 months. Goods producers recorded the second-slowest rise in international sales since September 2024 (ahead of February 2026), said the PMI data.

Business confidence remained strongly positive in May, with the overall level of positive sentiment remaining above its long-run average despite retreating to a three-month low.

Competitive pricing strategies, marketing efforts and hopes of better market conditions in the coming months underpinned optimism.

The HSBC Flash India Manufacturing PMI was down from 54.7 in April to 54.3 in May, indicating the second- weakest improvement in the health of the sector in close to four years (ahead of March), said the PMI data.

(Disclaimer: This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)