India's manufacturing sector showed notable improvement in May, as the Purchasing Managers' Index (PMI) climbed to 55.0, up from 54.7 in April. This increase indicates the strongest growth in three months, primarily fueled by a rise in new orders and output. The report from S&P Global highlighted that robust domestic demand and ongoing infrastructure projects were key contributors to this growth, although export orders experienced a slower increase. Chief India Economist at HSBC, Pranjul Bhandari, noted that the ongoing conflict in the Middle East has prompted manufacturers to engage in precautionary stockpiling. Despite facing elevated input cost pressures, manufacturers continued to expand production, benefiting from strong domestic demand. The report also indicated that input costs rose significantly due to higher spending on energy and raw materials, with inflation remaining high compared to previous months. Overall, the manufacturing sector maintained solid growth momentum in May.