India’s core sector output grows 0.7% in May

New Delhi: The output of eight core infrastructure sectors, which account for two-fifths of India’s industrial output, expanded by 0.7% annually in May, its slowest in nine months, according to the provisional data released on Friday by the commerce ministry.

This growth stood at 6.9% in May 2024, while April 2025 growth was revised upward from 0.5% to 1%.

The Index of Eight Core Industries measures the combined and individual output of key industries, which include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity.

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Only three of the eight core industries, refinery products, steel and cement, reported a sequential rise in production during May.

Core sector output contributes 40.27% to the Index of Industrial Production (IIP).

To be sure, India's Industrial production grew at 2.7% annually in April, its slowest pace in eight months, as mining output contracted and power generation grew at a slower pace over a high base, according to provisional data released last month by the statistics ministry.

The modest expansion of factory output, compared with a 5.2% annual expansion in the year-ago period, signals the challenges facing the economy.

May's data will be released at the end of the month.

Steel, cement output rise

Of the eight core industries, only refinery products, steel and cement, saw production increase month-on-month in May.

Output of refinery products rose by 1.1% in May, compared to a 4.5% contraction in April. Steel output rose 6.7%, up from 4.4% in the same period.

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Cement production rose 9.2% in May, up from 6.3% in April.

Production in four sectors, crude oil (-1.8%), natural gas (-3.6%), fertilisers (-5.9%) and electricity (-5.8%), contracted in May.

Coal production rose by 2.8% in May, below April's 3.5%.

Manufacturing hit three-month low in May

India’s manufacturing activity dropped to a three-month low in May as growth in new orders and output softened, a private survey released earlier this month.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 57.6 in May from 58.2 in April and 58.1 in March. India's manufacturing PMI was 56.3 in February and 57.7 in January.

A reading above 50 indicates expansion.

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Economists linked the slowdown in core sector growth to base effects and sector-specific factors.

"On the positive side, the steel sector registered growth of 6.7% which came on a higher base of 8.9% and is hence creditable. The pick-up in infrastructure activity has aided this progress. Demand from construction and auto besides capital goods would account for this increase," said Madan Sabnavis, chief economist at the Bank of Baroda.

"We can expect IIP growth to be around 1.5% for this month (May)," he added.