HSBC India Manufacturing PMI Indicates Fastest Improvement In Operating Conditions In Over 17 Years
India’s manufacturing PMI hit another new high in August, driven by a rapid expansion in production.
Indian manufacturing growth gained further momentum in August, as indicated by a manufacturing sector indicator. Up from 59.1 in July to 59.3 in August, the seasonally adjusted HSBC India Manufacturing Purchasing Managers’ Index indicated the fastest improvement in operating conditions in 17-and-a-half years. The upward movement in the headline figure largely reflected an acceleration in growth of production volumes, stated the release. The rate of expansion was the quickest in close to five years.
India’s manufacturing PMI hit another new high in August, driven by a rapid expansion in production. The increase of US tariff on Indian goods to 50% might have contributed to the slight easing in new export orders growth, as American buyers refrain from placing orders in the midst of tariff uncertainty. However, overall orders growth, on the other hand, held up much better, suggesting that domestic orders remained robust, helping to cushion against tariff-related drag on the economy.Pranjul Bhandari, Chief India Economist, HSBC
Incoming new orders rose to broadly the same extent as in July, which was the fastest in 57 months. In addition to demand buoyancy, survey participants linked growth to advertising success. The strongest sales and output performances were noted in the intermediate goods category, followed by capital and then consumer goods. Underlying data showed a softer increase in international orders placed with Indian manufacturers. The rise was the weakest for five months, though sharp by historical standards. Firms reported having secured new work from clients in Asia, Europe, the Middle East and the US.
Employment rose for the eighteenth month in a row during August. Despite slowing to the weakest since November 2024, the pace of job creation was historically solid.
One factor that supported these positive spending trends was confidence among manufacturers that output would increase over the course of the coming 12 months. The overall level of positive sentiment recovered from July's three-year low.
Input costs continued to increase, with bearings, leather, minerals, steel and small electronic parts featuring in the report's 'up in price' list, according to the release. The overall rate of inflation was, however, moderate and below its long-run average. Selling charges rose at an above-trend pace, reportedly as a result of demand strength. The marked rate of inflation seen in August was the highest for three months.
