Mideast war dampens India private sector growth, services pick up, PMI shows

BENGALURU, May 21 (Reuters) - India's private sector growth eased in May as a manufacturing slowdown driven by the Middle East war and cooling international demand offset a marginal pick-up in the service economy, a survey showed.

* The HSBC flash Composite Purchasing Managers' Index (PMI), compiled by S&P Global, dipped to 58.1 this month from April's final reading of 58.2, but was higher than a Reuters poll median forecast for 58.0. The 50-mark separates expansion from contraction.

* May's deceleration was primarily centred in manufacturing, where new orders expanded at one of the slowest rates in nearly four years and production growth eased to its second-weakest level since mid-2022. The factory PMI dropped to 54.3 in May from April's 54.7.

* The services PMI business activity index offered a slight counterweight, rising to 58.9 from 58.8.

* New export orders across the private economy grew at their weakest pace in 19 months with survey respondents noting the Middle East conflict and travel disruptions dampened international demand.

* Overall input costs went up, driven by manufacturing outlays increasing at the steepest rate since July 2022 amid higher prices for energy, steel, and food. Firms limited the pass-through of these overheads with output charges at the composite level rising at the weakest pace since January.

* Service providers hired additional staff at the greatest extent in nearly a year, outperforming the manufacturing sector where job creation softened.

* With business optimism retreating to a three-month low, the latest figures suggest persistent cost burdens and cooling global demand are beginning to test the resilience of India's growth engine. (Reporting by Anant Chandak; Editing by Jacqueline Wong)