India's Manufacturing Sector Hits Three-Month High in May

India's manufacturing activity saw significant growth in May, with the PMI rising to 55.0. This improvement was driven by a surge in new orders and output, amid rising input costs due to Middle East tensions. Domestic demand led the growth, overshadowing moderate international order gains.

India's manufacturing sector showcased robust performance in May, as evidenced by the Purchasing Managers' Index (PMI) climbing to 55.0 from April's 54.7, according to S&P Global data. The increase, driven by a rise in new orders and output, marks the strongest uptick in the sector's health over the past three months.

The PMI, a measure of manufacturing performance captured through new orders, output, employment, supplier delivery times, and inventory levels, also exceeded a flash estimate of 54.3. Manufacturers highlighted the fastest growth in orders and production since February, with intermediate and capital goods seeing the strongest demand.

Pranjul Bhandari, HSBC's Chief India Economist, remarked that domestic demand was the primary growth catalyst, as international orders grew at a slower rate. Despite rising input costs due to ongoing Middle East tensions, companies remained resilient, maintaining a solid growth trajectory bolstered by strong local demand and strategic stockpiling initiatives.