Ira Singh 
India's manufacturing sector expanded at its fastest pace in three months in May, supported by robust domestic demand, infrastructure activity and fresh business gains, even as firms continued to face elevated input cost pressures, according to a monthly survey released on Monday.The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) rose to 55.0 in May from 54.7 in April, signalling a stronger improvement in operating conditions across the sector. A PMI reading above 50 indicates expansion, while a figure below 50 denotes contraction.
The latest data showed that manufacturers benefited from increased demand in the domestic market, helping drive the fastest growth in output and new orders since February. Survey participants cited strong customer demand, infrastructure-related projects and new business wins as key factors supporting the upturn."India's final manufacturing PMI points to another month of possible precautionary stockpiling as the Middle East conflict remains unresolved. Output growth accelerated, while purchasing activity and stocks of finished goods rose at a faster pace," said Pranjul Bhandari.The survey indicated that domestic demand remained the primary engine of growth, while export orders continued to increase at a comparatively slower pace.
Manufacturers also stepped up purchasing activity during the month, with buying levels rising at the fastest rate in three months. The increase was partly driven by efforts to build contingency inventories amid ongoing geopolitical uncertainties and concerns over supply chains.On the inflation front, businesses continued to grapple with rising costs linked to energy, fuel, raw materials and transportation. The ongoing conflict in the Middle East was cited as a factor contributing to higher input expenses."Input cost inflation eased slightly on the month, and output price inflation slowed more sharply, suggesting a potential squeeze on manufacturers' margins," Bhandari said.
Despite the cost pressures, firms maintained strong purchasing activity and continued to expand production to meet rising demand.The survey also pointed to sustained job creation across the manufacturing sector. Although employment growth eased slightly from April's pace, companies continued to hire additional workers to support increased production requirements.Business sentiment remained broadly positive, with manufacturers expressing confidence that cost pressures could moderate later in the year. Strong order books, marketing initiatives and expectations of continued demand growth also contributed to optimism regarding future output.
The HSBC India Manufacturing PMI is compiled by S&P Global based on responses from purchasing managers at around 400 manufacturing firms across the country. The index is widely regarded as a key indicator of trends in output, new orders, employment, supplier delivery times and inventory levels.The latest reading suggests that India's manufacturing sector continues to demonstrate resilience, supported by strong domestic demand and ongoing infrastructure spending, even as global uncertainties and inflationary pressures remain key challenges for businesses.
(Business Correspondent)
