India's manufacturing PMI rises to three-month high of 55.0 in May on robust demand

India’s manufacturing sector showed resilience in May, with the Purchasing Managers’ Index (PMI) climbing to 55.0 from 54.7 in April, marking a three-month high according to S&P Global data. The increase reflected stronger demand, as new orders grew at their fastest pace since February, fueled by civil engineering projects, competitive pricing, and favorable market conditions. Domestic demand remained the primary growth driver, though export orders expanded at a slower rate, the weakest in three months. Factory output accelerated to its fastest growth in three months, led by intermediate and capital goods producers, while consumer goods manufacturers saw a slight easing in growth. Manufacturers continued adding jobs, though the hiring pace slowed compared to April. Input price inflation stayed elevated, the second-highest in nearly four years, driven by higher energy, fuel, raw materials, and transportation costs, exacerbated by the conflict in West Asia. Capital goods manufacturers faced the sharpest rise in input costs, while selling price inflation eased from April and remained below input cost growth, indicating competitive pressures limited price hikes. Firms sharply increased purchasing activity, the fastest growth in three months, partly to stockpile against potential supply disruptions. Business confidence weakened to its lowest since February but remained positive, with firms expecting cost pressures to ease due to strong order pipelines and ongoing marketing efforts. Analysts noted that output growth and purchasing activity surged, suggesting precautionary stockpiling amid ongoing geopolitical tensions in the Middle East. The easing of output price inflation, though slower than input costs, highlighted margin pressures for manufacturers.