India’s services sector has seen its third-highest output growth since 2010 – check flash PMI estimates here

HSBC’s Flash India PMI estimates for May showed that the private sector recorded the third highest output in the month since July 2010. The Flash India Services PMI business activity index was at 61.4 in May, while the final services PMI data for April was at 60.8 . PMI data for March was slightly higher and amounted to 61.8.

Flash manufacturing PMI estimates for India

On the other hand, the manufacturing sector recorded strong growth in sales and production during the month. HSBC Flash India Manufacturing PMI estimates for May were 58.4, slightly lower than the final PMI of 58.8 in April.

The data signaled strength in new export orders in both sectors. The study noted: “Services companies saw a surge in business activity, the sharpest in four months, while factory output grew at its slowest pace since February. However, manufacturing continued to grow faster than services.”

The Manufacturing PMI provides insight into a factory’s business conditions and is calculated based on new orders, production levels, employment data, supplier delivery times and purchasing statuses. The slip in estimates for May marked the sector’s weakest recovery in three months, but the rally remained forgettable by historical standards.

Flash Composite PMI estimates

The HSBC Flash India Composite PMI Output Index for May was 61.7, while the final figures for April were 61.5. This was the third-fastest pace of expansion in almost 14 years. The Flash Composite PMI is seasonally adjusted and helps understand monthly changes in the overall output of the country’s manufacturing and service sectors.

The index revealed that growth remained strong only in July 2023 and March 2024. This growth was explained by several factors such as productivity growth, large inflow of new work, strong demand and effective advertising by survey respondents.

HSBC Flash India PMI data is compiled by S&P Global based on responses to questionnaires shared with survey panels of nearly 400 manufacturers and 400 service providers. Flash data is calculated from 80 to 90 percent of all responses and is intended to provide accurate insight into the final data for the month.

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Expert comments

Based on the survey results, Pranjul Bhandari, chief economist at Indian bank HSBC, noted: “The composite PMI index rose again in May, recording the third highest reading in nearly 14 years, supported by a sharp acceleration in the services sector. Although the manufacturing sector’s growth slowed slightly in May, led by a slowdown in new orders and production, output growth in the manufacturing industry continued to outpace growth in the service economy. Additionally, the latest data showed the strength of new export orders for both sectors growing at the fastest pace since the series began in September 2014. Optimism for the coming year rose to its highest level in over 11 years, causing companies to increase hiring levels. However, higher production costs in both sectors have led to a further increase in margin squeeze, particularly for service providers.”