India's manufacturing sector demonstrated notable growth in May, as indicated by the Purchasing Managers' Index (PMI) rising to 55.0, up from 54.7 in April. This increase reflects stronger growth in new orders and output, with manufacturers engaging in precautionary stockpiling amid ongoing uncertainties in the Middle East. The PMI reading surpassed the preliminary estimate of 54.3, marking the strongest improvement in the sector's health in three months. Growth was primarily driven by robust demand in intermediate and capital goods, while consumer goods producers experienced slower expansion. Pranjul Bhandari, Chief India Economist at HSBC, noted that domestic demand played a crucial role in this growth, despite a moderation in export orders. The report also highlighted elevated input cost inflation, driven by rising prices for energy, fuel, and raw materials, with companies reporting the second-fastest increase in purchasing prices since April 2022. Nevertheless, the manufacturing sector continued to expand production, supported by strong domestic demand, maintaining its growth momentum in May.