HSBC Flash PMI: Private Sector Activity Eases to 58.1 in May

India's Private Sector Activity Moderates Amid Global Uncertainties

India's private sector activity slowed in May, as the prolonged Iran war and continued disruption of the Strait of Hormuz weighed on business sentiment and external demand. According to a private survey, the HSBC India Composite Purchasing Managers' Index (PMI) decreased to 58.1 in May from 58.2 in April.

While the index remained above the 50-mark that separates expansion from contraction, the latest reading suggests that momentum in the economy is beginning to moderate. The slowdown was led by factory activity, with the manufacturing PMI falling to 54.3 in May from 55.9 in the previous month.

Services Activity Remains Resilient

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Services activity remained relatively resilient at 58.9, higher than 58.8 in April, though it stayed below the stronger readings seen through much of 2025. This divergence between manufacturing and services suggests that domestic consumption is continuing to support the economy.

Impact of Global Uncertainties

The moderation in private sector activity comes as the West Asia conflict entered its third month, disrupting shipping routes and increasing uncertainty around energy supplies and trade logistics. Concerns over crude prices and freight costs have intensified following the continuous near-blockade of the Strait of Hormuz, a critical route for global energy shipments.

Economic Trends

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India's composite PMI touched a peak of 63.2 in August 2025, driven by strong domestic demand and robust services growth. Since then, activity has steadily cooled, with manufacturing losing steam. Manufacturing PMI has now declined from 59.3 in August 2025 to 54.3 in May.

The services PMI stood at 62.9 in August 2025 and has since trended lower, reflecting weaker global demand conditions and rising input cost pressures. The May reading also indicates that private sector activity is now operating below the pace seen during most of FY26, when composite PMI readings were consistently above 59 and often above 60.