Shocking! India's May Factory Growth Slips to New Low

Economic Crisis: May Factory Growth Slips to 3-Month Low in India

India's manufacturing growth slowed to a three-month low in May as a heatwave caused some companies to cut working hours. However, factory activity remained strong overall, boosted by solid sales, a business survey showed on Monday. Asia's third-largest economy often sees high temperatures in May, and they soared above 50 degrees Celsius (122°F) in several northern and western regions last month.

The HSBC India Manufacturing Purchasing Managers' Index, compiled by S&P Global, dipped to 57.5 in May from April's 58.8, below a preliminary estimate of 58.4. Despite the slowdown, the index stayed above its long-run average and has been over the 50-mark separating contraction from expansion for nearly three years.

"The manufacturing sector remained in expansion in May, though the growth rate slowed, led by a softer rise in new orders and output," said Maitreyi Das, a global economist at HSBC. "Conversely, new export orders rose at the fastest pace in over 13 years, with broad-based demand across regions."

Government data on Friday showed India's economy grew by 7.8 percent year-on-year in the January-March quarter, helped by strong manufacturing. Economists expect this momentum to stay strong this year. The growth rate was above the Reuters poll forecast of 6.7 percent.

A national election started on April 19 and voting will conclude on June 1, with results due on June 4. The output and new order PMI sub-indices eased to three-month lows but were strong overall due to steady demand and favorable economic conditions. Growth was also limited by election-related disruptions.

However, international sales grew at the strongest rate in over 13 years, extending the current streak of rising export orders to 26 months. Firms showed the highest level of optimism in over nine years, expecting demand to remain strong. This optimism led companies to add jobs at the fastest pace since November 2022.