India's economy experienced a significant surge in exports and a notable increase in employment, marking the sharpest upturn in nearly 18 years, according to HSBC Flash Purchasing Manager’s Index (PMI) data released on Thursday.
The data, compiled by S&P Global, revealed the third-strongest upturn in private sector output since July 2010. While manufacturing remained a key driver of growth in sales and output, it was the service sector that notably contributed to the overall economic expansion.
Positive indicators from May’s survey included a record increase in aggregate exports, the most substantial expansion in private sector jobs since 2006, and a noticeable uptick in business confidence. However, there was also a faster rise in input costs, leading to higher prices for Indian goods and services.
According to the survey, the headline HSBC Flash India Composite Output Index rose from 61.5 in April to 61.7 in May, marking the third-strongest rate of expansion in close to 14 years. Growth in this period was surpassed only in July 2023 and March 2024. Factors contributing to the increase included successful advertising, efficiency gains, robust new work intakes, and demand strength.
Pranjul Bhandari, Chief India Economist at HSBC, noted, “The composite PMI ticked up further in May, recording the third-strongest reading in close to 14 years, supported by a sharp acceleration in the services sector. Although manufacturing sector growth slowed slightly in May, it continued to surpass that in the service economy.”
Bhandari also highlighted strength in new export orders for both sectors, which rose at the fastest pace since the series started in September 2014.
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