India’s business activity slows a bit in May

India shines in gloomy global scenario

India’s business activity continued to expand in May but at a slower pace, as cost pressures and tensions with Pakistan weighed on manufacturing performance.

According to data released by HSBC on June 4, the HSBC Business Activity Index declined to 59.3 in May from 59.7 in April.

India, however, was not alone in experiencing a moderation in economic activity. In Australia, the composite PMI eased to 50.5 in May from 51.0 in the previous month, as output growth slowed to its weakest pace since the beginning of the year.

Japan’s business activity index also dipped, falling to 50.2 from 51.2 in April.

“A weaker increase in services activity combined with a slightly quicker drop in manufacturing output left overall output up only slightly on the month,” said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

In India’s case, services sector activity rose to a three-month high of 58.8, while manufacturing activity slipped to a three-month low of 57.6, reflecting divergent sectoral dynamics.

The environment has become even more challenging for ASEAN economies, where manufacturing activity contracted for the second consecutive month.

The S&P Global ASEAN Manufacturing PMI stood at 49.2 in May, compared with 48.7 in April, remaining below the neutral threshold of 50, which separates expansion from contraction.

On a broader scale, global manufacturing PMI also declined, falling to 49.6 in May from 49.8 in the previous month. The decline was largely driven by weakening output in Mexico and Canada.

China’s manufacturing sector continued to struggle under the weight of US tariffs despite recent efforts by both countries to reduce tit-for-tat levies that exceeded 100 percent.

“A key driver of the renewed Asian decline was a marked drop in production in mainland China, where output fell for the first time since October 2023—and at the sharpest rate since November 2022—in a sign of intensifying impact from US tariffs. Exports also fell sharply,” S&P Global noted in its commentary.

Despite the headwinds, India remains among the best-performing major economies in terms of business activity, supported by strong domestic demand and resilient services output.