Growth was reportedly supported by rising sales, productivity gains and demand strength. The upturn was somewhat hampered by competitive and price pressures.
May data showed that robust increases in new business intakes continued to underpin output growth across India's service economy. Rates of expansion eased to the slowest in the calendar year-to-date, however, amid fierce competition, price pressures and a severe heatwave. Both input costs and output charges rose to greater extents.
Concurrently, new orders from international markets expanded at the steepest pace since the inception of this series nearly ten years ago. Another positive takeaway was a rebound in business confidence to its strongest in eight months.
Like for output, new orders rose at a substantial pace that was nonetheless the slowest in the calendar year-to-date. One area that improved substantially in May was new export orders, with growth climbing to the fastest seen since the inception of the series in September 2014.
Indian private sector output rose sharply halfway through the first quarter, despite another loss of growth momentum. The HSBC India Composite Output Index slipped from 61.5 in April to 60.5 in May, highlighting the slowest rate of expansion since last December. There were softer increases in both factory production and services activity.
Aggregate sales rose at the weakest pace in the calendar year-to-date, albeit one that was historically sharp. Goods producers outperformed service providers, though growth softened in both cases.
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Business sentiment improved at manufacturing firms and their services counterparts. Collectively, companies were at their most optimistic since September 2023.
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