India's private sector growth hits 13-month high in May, business confidence rebounds: HSBC Flash PMI

Led by strong expansion in the services segment and rising demand from both domestic and international markets, India's private sector growth accelerated to a 13-month high in May 2025, even as inflationary pressures ticked higher, according to HSBC’s Flash PMI data released on Thursday.

The HSBC Flash India Composite Output Index rose to 61.2 in May from 59.7 in April, marking the sharpest rate of expansion in private sector activity since April 2024.

According to the report, there was a mild loss of growth momentum in the manufacturing industry but service providers reported the fastest rise in output in 14 months.

“India’s flash PMI indicates another month of strong economic performance,” said Pranjul Bhandari, Chief India Economist at HSBC. “Growth in production and new orders among manufacturing firms remains robust, despite a marginal cooling from April. Notably, there is a firm pick-up in employment, especially in the service sector, suggesting healthy job creation accompanies the expansion of both India’s manufacturing and service sectors.”

The HSBC Flash India Manufacturing PMI edged up to 58.3 in May from 58.2 in April.

However, manufacturing output grew at the slowest pace in three months, while service providers recorded the fastest increase in output since March 2024.

Aggregate new orders rose at the quickest pace in over a year, buoyed by strong demand conditions and improved business confidence, which rebounded for the first time since January.

Export orders also increased at the quickest rate in a year, offsetting a slight slowdown in manufacturing exports.

However, price pressures intensified in May. Input cost inflation rose to a five-month high, while output charges increased at the fastest rate in six months. Manufacturing firms reported the steepest rise in selling prices in more than 11 years, as strong demand enabled them to pass higher costs on to customers.

Employment across the private sector continued to grow, reaching a fresh record since the series began in December 2005. Many firms hired both full-time and temporary staff to manage workloads, which saw only a modest increase.

Several companies mentioned that hiring efforts added to their operating expenses in May, with raw materials also cited as a source of inflationary pressures, according to the report.

While some companies noted headwinds from competition, pricing pressures, and geopolitical tensions such as the India-Pakistan conflict, the overall business sentiment improved.