May PMI manufacturing comes at 58.7; hits 31-month high on strong demand

India's manufacturing PMI showcased encouraging developments in May, painting a notably positive picture for the sector. 

The S&P Global India Manufacturing Purchasing Managers’ Index rose from 57.2 in April to 58.7 in May, indicating the strongest improvement in the health of the sector since October 2020.

Demand conditions demonstrated remarkable strength, with factory orders rising at the fastest pace since January 2021. 

This surge in sales paved the way for stronger increases in production, employment and quantities of

purchases. With supply chain-conditions improving further, companies noted a record accumulation in input inventories.

Meanwhile, cost pressures remained historically mild, but demand strength facilitated a solid and quicker increase in output charges.

Out of the five PMI sub-components, stocks of purchases showed notable vigour, increasing at an unprecedented pace in May. Monitored companies indicated that better supply-chain conditions and sustained increases in input purchasing boosted inventory growth.

May data indicated a sharp and accelerated increase in quantities of purchases, with the rate of expansion quickening to the strongest in over 12 years. According to survey members, ongoing increases in new business and efforts to replenish stocks underpinned growth of buying levels.

Not only did factory orders increase for the twenty-third month running in May, but also to the greatest extent since January 2021. Firms generally associated the upturn with advertising, demand strength and a favourable economic climate.

Exports gave impetus to total new orders in May. Companies registered the quickest expansion in international sales for six months.