India’s manufacturing sector experienced a slight slowdown in May 2025, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) dipping to 57.6 from 58.2 in April. This marks the lowest reading since February, though it remains well above the neutral 50.0 threshold and the long-term average of 54.1, indicating that growth in the sector is still intact.
The sector’s expansion was driven by healthy domestic and overseas demand, successful marketing initiatives, and increased export orders, which rose at one of the fastest rates in three years. Firms reported strong demand from key global markets, including Asia, Europe, West Asia, and the United States.
Those surveyed attributed the deceleration in May to elevated competition, cost pressures, and the ongoing India-Pakistan conflict, which has weighed on business sentiment.
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Record surge in employment
May also saw a record surge in employment. Hiring rose at the fastest pace in the PMI survey's history, with a greater emphasis on permanent roles over temporary ones. This sustained job creation helped firms manage workloads efficiently, halting a six-month streak of rising backlogs.
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Commenting on the report, Chief India Economist at HSBC Pranjul Bhandari said, “India’s May manufacturing PMI signalled another month of robust growth in the sector, although the rate of expansion in output and new orders eased from the previous month. The acceleration in employment growth to a new peak is certainly a positive development. Input cost inflation is picking up, but manufacturers seem to be able to lessen the pressure on profit margins by raising output prices.”
Cost pressures rise in May
Cost pressures intensified in May, with input inflation reaching a six-month high. Key cost drivers included aluminium, cement, iron, leather, rubber, and sand, alongside rising freight and labour expenses. To maintain profit margins, firms responded by raising selling prices at one of the steepest rates seen in over 11 years.
Despite these inflationary pressures, confidence among Indian manufacturers remained high. Businesses expressed optimism for output growth over the coming year, citing advertising and increased customer enquiries as key opportunities.
Industrial production slows to 2.7 per cent in April
Overall, industrial production growth slowed to 2.7 per cent in April, the lowest in eight months, down from the revised 3.94 per cent growth in March. This decline was largely due to a high base effect and a sequential drop in mining output, recent data from the National Statistics Office (NSO) showed.
Data from the Index of Industrial Production (IIP) revealed mixed performance across different sectors in April. The mining sector saw a contraction of 0.2 per cent, marking its first decline in eight months. Output in the electricity sector also slowed to a seven-month low, with growth decelerating to 1.1 per cent. Manufacturing output grew by 3.4 per cent, though at a slightly slower pace compared to previous months. What is manufacturing PMI?
The Manufacturing PMI is a critical economic indicator that gauges business activity within the sector. Derived from survey responses from purchasing managers, it tracks key areas like production levels, new orders, employment, supplier performance, and inventory.
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The Philippines, the world’s top rice importer, plans to look beyond its dominant supplier, Vietnam, to ensure steady supplies and competitive prices at home.
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The agriculture department is in talks with private importers on purchases from producers like India, Pakistan, Cambodia and Myanmar, Agriculture Secretary Francisco Tiu Laurel said in an interview on Friday. There may also be a “deal” with Indonesia and Thailand, he added.
“We are trying to diversify sources to keep a level playing field,” Laurel said. Vietnam is “the most reliable” supplier, but the fact that its shipments account for 90 per cent of the Philippines’ rice imports could be a “problem” in case of supply shocks, he said.
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The price of all rice varieties sold by Vietnam rose to a three-month high in April because of an “uptick in buying interest from domestic and offshore traders,” according to data from the UN Food and Agriculture Organization.
Affordable prices of the staple grain are central to the agenda of President Ferdinand Marcos Jr., who also helmed the agriculture department before appointing Laurel in November 2023. His government slashed import tariffs from 35 per cent to 15 per cent last year and declared a food security emergency in February to tame runaway prices. That’s helped slow overall inflation to its lowest level since 2019, giving the central bank room to further cut interest rates.
Laurel expects this year’s rice imports will be lower than in 2024 and won’t exceed 4.5 million tonnes. His outlook compares with a forecast from the US Department of Agriculture that sees the Southeast Asian nation importing 5.4 million tonnes in 2025. Domestically, the country is on track to produce a record of 20.46 million tonnes in rough rice output this year, the secretary said.
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Meanwhile, the Philippines is facing a 17 per cent duty on its goods to the US, the lowest rate in Southeast Asia — after Singapore — under President Donald Trump’s sweeping tariff agenda. Laurel said this presents an opportunity as it could make Filipino shipments to the US, particularly seafood products like tilapia and shrimp, more competitive than those of its neighbours.
“If our competitors are slapped with higher tariffs than us, it’s fine,” he said.
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