May PMI rises to 61.2, highest since April 2024, driven by services sector

Flash HSBC India PMI signals sharpest expansion in 13 months as services see robust growth and employment gains; input cost inflation at five-month high

India’s private sector is expected to post its sharpest expansion in over a year, with May’s HSBC Flash India Composite PMI Output Index rising to 61.2, up from 59.7 in April, according to data compiled by S&P Global.

 

This marks the strongest month-on-month growth since April 2024, driven largely by gains in the services sector.

 

Services sector leads the charge

The Services PMI Business Activity Index climbed to 61.2 in May from 58.7 in April, indicating the fastest pace of growth in 14 months.

 

Respondents cited strong domestic and international demand, along with technology investments and capacity expansion, as key drivers.

 

“India’s flash PMI indicates another month of strong economic performance,” said Pranjul Bhandari, Chief India Economist at HSBC. 

“The services sector, especially, is showing firm employment gains, highlighting healthy job creation alongside business growth.”

 

Manufacturing shows steady momentum

The Manufacturing PMI rose marginally to 58.3 in May from 58.2 in April, suggesting continued strength. However, manufacturing output slipped slightly to 61.4, down from 61.9 the previous month.

 

Despite the cooling in production, new orders and employment remained robust, maintaining the sector’s growth trajectory.

 

Input costs, output charges surge

Input cost inflation hit a five-month high in May, while output prices surged, especially in manufacturing, which recorded its sharpest rise in over 11 years.

 

These inflationary pressures were noted across both services and manufacturing, although firms continued expanding output to meet rising demand.

 

Business confidence rebounds

Despite ongoing geopolitical risks, including India–Pakistan tensions, business sentiment improved in May, reversing the decline seen in April.

 

Firms expressed renewed optimism for future sales and activity, particularly in the services segment.

 

Industrial production shows mixed signals

India’s Index of Industrial Production (IIP) grew by 3 per cent in March 2025, slightly better than February’s 2.9 per cent, but still lower than 5.5 per cent in March 2024, according to the Ministry of Statistics and Programme Implementation.

 

In Q4 FY25, IIP rose by 3.6 per cent, marking the second-lowest quarterly growth in the last two years.

 

Final PMI figures for May 2025 will be released in early June. IIP data for April is expected on May 28, 2025.