Intense heat wave slows down India's manufacturing growth in May

Lower work hours affected production volumes.

Manufacturing activity in India slowed down in May with a three-month low of 57.5 PMI from the previous month's 58.8 as heat waves that hampered production volumes took a toll on the sector, an HSBC India Manufacturing Purchasing Managers’ Index survey said.

"The manufacturing sector remained in expansionary territory in May, albeit the pace of expansion slowed, led by a softer rise in new orders and output," said Maitreyi Das, HSBC Global economist.

Panellists mentioned heatwaves as a reason for lower work hours in May, which may have affected production volumes. New export orders rose at the fastest pace in over 13 years, with a broad-based demand across geography.

"The positive news is that May recorded the highest level of positive sentiment amongst manufacturing firms in just under a decade, resulting in increased job creation," Das added.

A figure above 50 in the index suggests expansion while the one below indicates contraction.

Job creation in May was fueled by ongoing strong sales performances along with upbeat growth forecasts.

Manufacturing employment has also increased to one of the biggest seen since data collection started in March 2025.

Job growth, similar to rising material and freight costs, doused a speedier increase in input costs at goods producers.

Likewise, the overall rate of inflation remained below its long run average. However, it picked up to its joint-highest since August 2022.

The survey also noted sustained growth of input purchasing among Indian goods producers. Worth noting was that buying levels rose at the slowest pace in four months.

More improvement in vendor performance, the best in more than 18 years, supported firms' efforts to add to their input stocks. Inventories of raw materials and semi-finished items increased at one of the strongest rates in the series history.

Finished goods stocks decreased markedly during May as several companies leveraged warehoused products to meet higher demand.