In May, India’s manufacturing sector saw a slowdown for the second month in a row due to intense heatwaves affecting production volumes. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropped from 58.8 in April to 57.5 in May, still above the long-term average but below the preliminary estimate. New orders grew at the slowest pace in three months, with reduced working hours and increased competition being contributing factors. Production costs rose, leading to manufacturers increasing selling prices. Despite this, optimism among Indian manufacturers regarding growth prospects remained high, driven by advertising and innovation. However, potential risks such as above-normal rainfall and elevated global crude oil and commodity prices loom. The RBI’s upcoming monetary policy meeting in June will be crucial, with expectations of a rate status quo. International sales showed a positive trajectory, with the strongest export upturn in over 13 years. India’s economic growth heavily relies on domestic consumption, with GDP growth at 7.8% in the March quarter of 2024. However, a consumption recovery, especially in the rural sector, is necessary for a more robust growth story.
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