Has Business Activity in India Reached a 13-Month High in May? HSBC Composite PMI Reports
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Synopsis
In May, India's business activity soared to a remarkable 13-month high of 61.2, driven by strong performance in the service sector and job creation. This growth reflects an upturn in both domestic and international markets, showcasing India's economic resilience. Discover the factors behind this surge in activity and its implications for the economy.
Key Takeaways
- HSBC Flash India Composite Index hit a 13-month high of 61.2 in May.
- Significant growth noted in both manufacturing and service sectors.
- Service providers experienced the fastest output growth in 14 months.
- Job creation increased, particularly in the service sector.
- Investment and demand drove the expansion in business activity.
New Delhi, May 22 (NationPress) The HSBC Flash India Composite Output Index – which assesses the month-on-month variations in the combined outputs of India's manufacturing and service sectors – revealed on Thursday that business activity in the nation soared in May, achieving a notable 13-month peak of 61.2, up from 59.7 in the previous month.
With a reading of 61.2 in May, the HSBC Index reflected a pronounced expansion rate in private sector activity.
“This growth marked the most significant increase since April 2024. Although there was a slight slowdown in the manufacturing sector, service providers experienced the most rapid output increase in the past 14 months,” noted the HSBC Flash India PMI report.
The HSBC Flash India Manufacturing PMI remained relatively stable compared to April's figure of 58.2. In May, it stood at 58.3, indicating a solid improvement in the health of the sector.
Private sector growth in India accelerated during May, propelled by an upturn in the service economy.
The influx of new business, both domestic and international, spurred quicker growth in business activity and job creation.
For the first time since January, there was also a rise in business confidence, according to the HSBC.
"India’s flash PMI signals another month of remarkable economic performance. The growth in production and new orders among manufacturing firms remains strong, despite a slight cooling from the rates seen in April,” stated Pranjul Bhandari, Chief India Economist at HSBC.
Importantly, a noticeable increase in employment, particularly within the service sector, suggests that healthy job creation accompanies the expansion in both India’s manufacturing and service sectors, Bhandari added.
While goods producers reported the slowest output increase in three months during May, service providers noted the fastest rise since March 2024.
Overall, the latest growth marked the swiftest increase in just over a year. Companies observed attributed this growth to strong demand, technological investments, and increased capacities, as outlined in the report.
“The underlying data indicated that ongoing job creation allowed firms to manage their workloads effectively in May. Employment not only continued to rise, but growth also reached a new series record (since December 2005). Anecdotal evidence suggested that both full-time and part-time staff were recruited on permanent and temporary bases,” stated the HSBC report.
Point of View
It is crucial to recognize the substantial implications of the recent rise in India's business activity. The data from HSBC reflects not just a number but a growing confidence in our economy. The robust performance in both manufacturing and service sectors is a testament to the resilience and potential of our nation, affirming that we are on a path of sustainable economic growth.
NationPress
01/06/2025
Frequently Asked Questions
What is the HSBC Flash India Composite Output Index?
The HSBC Flash India Composite Output Index measures the month-on-month changes in the combined output of India's manufacturing and service sectors, providing insights into the economic activity in the country.
What was the index value for May?
In May, the index value reached 61.2, marking a 13-month high and indicating a robust expansion in business activity.
Which sector showed the fastest growth?
The service sector reported the fastest increase in output in 14 months, contributing significantly to the overall business activity.
How did employment figures change?
There was a noticeable increase in employment, especially in the service sector, suggesting healthy job creation accompanying the economic expansion.
What factors contributed to this economic growth?
The growth was attributed to strong demand, investments in technology, and expanded capacities within businesses.
