HSBC PMI sees immense growth in after-sales with its Manufacturing domain

In May, Indian business growth persisted, driven by robust expansion in the services sector, despite a cooling off in manufacturing activities, according to HSBC Holdings Plc’s flash survey. While manufacturing saw a slowdown in new orders and production, services firms experienced a sharp increase in business activity, marking the steepest growth in four months. The HSBC Flash India PMI, compiled by S&P Global, reported that the services purchasing managers’ index (PMI) climbed to 61.4 from 60.8 last month, while the manufacturing PMI eased to 58.4 from 58.8 in April. The composite PMI, which measures the combined output of India’s manufacturing and service sectors, rose to 61.7 in May from 61.5 in April, indicating substantial expansion. Based on responses from 400 manufacturers and 400 service providers, the survey highlighted a significant acceleration in the service sector and a notable increase in new export orders for both sectors, the fastest since September 2014. Optimism about the year ahead also surged to its highest level in over 11 years, leading to increased staffing levels.

However, higher input costs in both sectors resulted in further margin squeezes, particularly for service providers. India continues to assert its position as one of the fastest-growing major economies, with the Reserve Bank of India (RBI) expecting a 7% growth in FY25 and the government’s second advanced estimate projecting a 7.6% growth in FY24. The survey also noted a considerable improvement in confidence surrounding near-term output prospects among Indian private sector firms, as reflected in the Future Output Index. Despite retail inflation remaining above the RBI’s target of 4%, it has stayed within the 2-6% tolerance range for eight consecutive months. However, price pressures may challenge the new government, as the inflation rate outpaced its long-run average, particularly in the manufacturing industry. Industrial output growth slowed to 4.9% in March after reaching a four-month high of 5.6% in February, indicating fluctuations in economic performance.