Page 8 - Demo

Economic Review June 20258www.projectstoday.comof 50.0 and the long-term average of 54.1, indicating sustained sectoral resilience.Although growth in new orders and output slowed to a three-month low, both indicators remained comfortably above their historical averages. Survey respondents attributed this performance to steady domestic and international demand, coupled with effective marketing strategies. That said, inflationary pressures, heightened market competition, and geopolitical tensions, particularly the India-Pakistan conflict, acted as headwinds to stronger expansion.Manufacturers continued to scale up their purchasing activity and workforce levels. Notably, the rate of job creation reached a new series peak, with many firms prioritising permanent hires over temporary roles.International demand remained robust, with new export orders expanding at one of the fastest rates recorded in the past three years. Strong demand from markets in Asia, Europe, the Middle East, and the USA played a key role in driving this growth.Looking ahead, manufacturers remain strongly optimistic about output growth over the next 12 months, underpinned by expectations of increased advertising efforts and a rise in new customer enquiries.Services IndexIndia%u2019s services sector maintained its robust growth momentum in May 2025, with business activity and new order volumes expanding at a pace similar to that observed over the past three months. A key highlight was a notable surge in international demand%u2014the second strongest in the 19.5-year history of the survey%u2014driven by increased interest from markets in Asia, Europe, and North America.Employment saw a historic upswing, as service providers ramped up hiring to meet the sales growth. Nearly 16 percent of firms reported higher staffing levels, marking the fastest rate of job creation since the survey began.Cost pressures also intensified, with input prices and output charges rising above their long-run averages. Increases were linked to higher expenses on overtime, raw materials such as cooking oil and meat, and general operating costs. This resulted in the sharpest inflation since the start of the year.The seasonally adjusted HSBC India Services PMI Business Activity Index rose slightly to 58.8 in May 2025 from 58.7 in April 2025, indicating continued strong expansion supported by healthy demand, new client acquisitions, and increased workforce capacity. New orders remained buoyant due to marketing efforts, repeat customers, and strong underlying demand.Business sentiment rebounded in May following a dip in April, as companies expressed optimism about future growth, citing better staffing, growing clientele, and strategic marketing as key drivers.Outstanding work increased only marginally, reflecting reduced capacity pressures due to improved staffing.Composite IndexThe HSBC India Composite PMI Output Index registered 59.3 in May, slightly below April%u2019s 59.7, yet still pointing to significant overall growth. While manufacturing output growth softened, the services sector gained momentum.New business growth eased slightly across both manufacturing and services, though it remained robust. Employment growth across the combined sectors hit a record high, supported by strong demand trends.Input costs rose sharply across the private sector, reaching a six-month peak, driven more by services than manufacturing. Selling prices also saw their fastest rise since November 2024, led by manufacturing.