India's private sector growth slows in May

India's private sector growth slows in May

India's private sector activity witnessed a slowdown in May, with the HSBC India Composite Purchasing Managers' Index (PMI) easing to 58.1 from April's 58.2.

The decline is mainly due to the ongoing US-Iran war and disruption of the Strait of Hormuz, which have adversely affected business sentiment and external demand.

Despite this, the index remains well above the 50-mark that separates expansion from contraction, indicating continued growth in economic activity.

Manufacturing activity dips to 54.3

The slowdown in India's private sector activity is mainly driven by a dip in factory activity.

The manufacturing PMI has slipped to 54.3 in May from April's 55.9.

However, services activity has remained relatively resilient at 58.9, up from last month's 58.8 reading but still lower than the stronger numbers seen throughout much of 2025.

Impact of West Asia conflict on India

The ongoing West Asia conflict, which is now in its third month, has affected shipping routes and created uncertainty over energy supplies and trade logistics.

Fears of rising crude prices and freight costs have intensified due to the continuous near-blockade of the Strait of Hormuz, a key route for global energy shipments.

These external factors have contributed to the moderation in India's private sector activity for May.

PMI readings for FY26

The May reading of India's composite PMI indicates that private sector activity is now operating below the pace seen during most of FY26.

In this period, composite PMI readings were consistently above 59 and often above 60.

The divergence between manufacturing and services suggests domestic consumption continues to support the economy but external uncertainties, supply-chain disruptions, and higher commodity prices are increasingly weighing on industrial activity.