India's manufacturing PMI drops to 57.6 in May

Falling from 58.2 in April to 57.6 in May, the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) highlighted the weakest improvement in operating conditions since February.

The headline figure was nevertheless well above both the neutral mark of 50.0 and its long-run average of 54.1.

May data indicated another robust improvement in business conditions across India's manufacturing industry. Although rates of increase in new orders and output retreated to three-month lows, they remained well above their respective long-run averages.

Panellists suggested that demand strength continued to support sales and production, though competition, inflation and the India-Pakistan conflict had reportedly weighed on growth.

Goods producers lifted input buying and headcounts again, with the latter experiencing a series-record upturn. Meanwhile, cost inflation climbed to a six-month high and selling prices were raised to one of the greatest extents seen in circa 11-and-a-half years.

Ongoing increases in new orders continued to support output, but rates of expansion receded to their weakest in three months. New export orders rose at one of the strongest rates recorded in three years.

Positive sales developments encouraged companies to purchase additional inputs for use in production processes.

Companies operating in India's manufacturing economy faced another monthly increase in purchasing prices.

Sustained job creation enabled manufacturers to stay on top of their workloads in May. Outstanding business volumes was unchanged, ending a six-month period of accumulation.

Indian manufacturers remained strongly confident of a rise in output over the course of the coming 12 months. Among the main opportunities to growth, they remarked on advertising and new customer enquiries.

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