By Malvika Gurung
Investing.com -- India's manufacturing sector witnessed significant growth in May 2023, as the Purchasing Managers' Index (PMI) soared to a 31-month peak, surpassing the Street’s estimate.
According to data released by S&P Global (NYSE: SPGI ) on Thursday, the domestic PMI increased to 58.7 in May, the fastest pace since October 2020, on the back of robust demand and output levels.
The manufacturing PMI came in higher than Investing.com’s forecast of 56.5, and from 57.2 in April 2023.
The manufacturing index continued to stay above the 50-mark figure that separates growth from contraction, for the 22nd consecutive month in May, fueling optimism among investors and industry stakeholders.
The strong performance of India's manufacturing sector can be attributed to multiple factors including favourable market conditions, demand strength, and publicity efforts by panel members. The manufacturing sector has been a primary driver of India's economy over the past few quarters.
Despite the promising figures, economists appear concerned over the potential slowdown of manufacturing growth and the necessity for robust domestic consumption demand moving forward.
“While improvements in supply chains and generally subdued global demand for inputs helped curb input price inflation in May, heightened demand and previously absorbed cost burdens translated into a stronger upward revision to selling charges,” said Pollyanna De Lima, the Economics Associate Director at S&P Global.
“Demand-driven inflation is not inherently negative, but could erode purchasing power, create challenges for the economy and open the door for more interest rate hikes,” De Lima added.
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