Manufacturing Growth Slows Amid Inflation and Geopolitical Tensions

India's manufacturing sector growth hit a three-month low in May due to inflation, softer demand, and geopolitical tensions. The PMI fell to 57.6, indicating robust but weakening improvement. Inflationary pressures challenge profit margins, though employment and exports showed strength.

India's manufacturing sector witnessed a three-month low in growth during May, impacted by ongoing inflationary pressures and geopolitical tensions, according to a recent survey released on Monday.

The seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index (PMI) noted a decrease from 58.2 in April to 57.6 in May, marking the weakest operational expansion since February. This drop suggests persistent but tempered improvement in the sector's conditions.

Despite these headwinds, Indian manufacturers expressed confidence in future output, supported by increased job creation and strong export demand from key global regions including Asia, Europe, the Middle East, and the US. Rising operating costs led companies to raise selling prices, albeit cautiously, to counterbalance input cost inflation.