FX.co ★ India Private Sector Growth Remains Robust In May

India's private sector exhibited its third-strongest growth in nearly fourteen years this May, spurred by a significant upswing in the services sector, according to preliminary data from S&P Global.

The flash HSBC Composite Output Index edged up to 61.7 in May from 61.5 in April, with any reading above 50 signaling expansion.

Despite the manufacturing sector still contributing to increases in output and sales, the recent surge in overall economic growth was primarily fueled by the services sector, the survey reported.

The robust growth was attributed to effective advertising, efficiency gains, substantial new work intake, and strong demand.

While manufacturing production increased at its slowest pace since February, the services sector experienced the highest business activity growth in four months.

The Manufacturing Purchasing Managers’ Index (PMI) slightly declined to 58.4 in May from 58.8 in April, yet remained robust by historical standards.

Conversely, the Services PMI improved to 61.4, up from 60.8 in the previous month.

This growth was further evidenced by a significant rise in new export orders, expanding at the fastest rate since the series began in September 2014, alongside a notable increase in total new orders.

Consequently, private sector employment grew at its fastest pace since September 2006.

On the pricing front, cost pressures intensified in May due to increased prices for chemicals, food, plastics, electronic components, and electrical items, leading to a corresponding rise in selling prices.

Finally, the Future Output Index saw a significant uptick in May, reflecting enhanced confidence among Indian private sector firms regarding near-term prospects.