Business conditions in India’s manufacturing sector continued to improve in May 2025, although the pace of expansion moderated slightly from April 2025. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) declined from 58.2 in April to 57.6 in May, marking the softest improvement since February 2025. However, the headline figure remained well above the neutral level of 50.0 and the long-term average of 54.1, indicating sustained sectoral resilience.
Although growth in new orders and output slowed to a three-month low, both indicators remained comfortably above their historical averages. Survey respondents attributed this performance to steady domestic and international demand, coupled with effective marketing strategies. That said, inflationary pressures, heightened market competition, and geopolitical tensions—particularly the India-Pakistan conflict—acted as headwinds to stronger expansion.
Manufacturers continued to scale up their purchasing activity and workforce levels. Notably, the rate of job creation reached a new series peak, with many firms prioritising permanent hires over temporary roles.
International demand remained robust, with new export orders expanding at one of the fastest rates recorded in the past three years. Strong demand from markets in Asia, Europe, the Middle East, and the USA played a key role in driving this growth.
On the cost front, input price inflation accelerated to a six-month high, with raw materials such as Aluminium, Cement, Iron, Leather, Rubber, and Sand identified as primary contributors. Firms also faced higher freight and labour costs. In response, many manufacturers raised their output prices, with selling price inflation among the steepest in nearly 11 and a half years.
Looking ahead, manufacturers remain strongly optimistic about output growth over the next 12 months, underpinned by expectations of increased advertising efforts and a rise in new customer enquiries.
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