Iran war dampens India private sector growth, services pick up, PMI shows

BENGALURU: India's private sector growth eased in May as ​a manufacturing slowdown ​driven by the Middle East war and cooling international ​demand offset a marginal pick-up in the service economy, a survey showed.

* The HSBC flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, ‌dipped to ⁠58.1 ⁠this month from April's final reading of 58.2, but was higher than ​a Reuters poll median forecast for 58.0. The 50-mark separates expansion from contraction.

* ​May's deceleration was primarily centred in manufacturing, where new orders expanded at one of the slowest rates in nearly four ​years and production growth eased to ⁠its second-weakest level ‌since mid-2022. The factory PMI dropped ​to 54.3 ​in May from April's 54.7.


* The services PMI ⁠business activity index offered a slight counterweight, rising to 58.9 from 58.8.

* New export orders across ​the private economy grew at their weakest pace in 19 months with survey respondents noting the Middle East conflict and travel disruptions dampened international demand.

* Overall input costs went up, driven by manufacturing outlays increasing at the steepest rate ‌since July 2022 amid higher prices for energy, steel, and food. Firms limited the pass-through of these ​overheads with ​output charges at ⁠the composite level rising at the weakest pace since January.

Also read | Core sector output rises 1.7% in April

* Service providers hired additional staff at the greatest extent in nearly ​a year, outperforming the manufacturing sector where job creation softened.

* With business optimism retreating to a three-month low, the latest figures suggest persistent cost burdens and cooling global demand are beginning to test the resilience of India's growth engine.

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