Manufacturing PMI hits 59.3 in Aug driven by rapid expansion in production

India manufacturing PMI hits 17 year high in August to 59.3 from 59.1 in July driven by a rapid expansion in production, shows HSBC survey as compiled by S&P Global

India’s manufacturing sector saw a strong growth in August, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) rising to 59.3 from 59.1 in July, S&P Global data showed on Monday. 

The PMI reading signalled the fastest improvement in operating conditions in 17 years and six months. The upward movement in the headline figure reflected acceleration in production volumes, with the pace of expansion the quickest in nearly five years. 

“India’s manufacturing PMI hit another new high in August, driven by a rapid expansion in production,” said Pranjul Bhandari, chief India economist at HSBC. 

Domestic demand cushions export slowdown

New orders continued to flow in strongly, matching July’s pace — the fastest in 57 months. The strongest sales and output performances came in the intermediate goods category, followed by capital and then consumer goods. 

 

Surveyed businesses reported higher input stocks, while the finished products inventories also expanded for the first time in nine months. 

 

There was a softer increase in international orders placed, with the rise being the weakest in the last five months. Firms reported securing new work from Asia, Europe, West Asia and the US. 

Much of this strength came from domestic buyers, with manufacturers pointing to successful advertising campaigns. International demand, however, showed signs of strain. Export orders increased at the slowest pace in five months, a trend analysts linked to the recent hike in US tariffs on Indian goods.

Job creation remains solid for 18th month

Firms accelerated purchases of additional materials and added more jobs, partly driven by optimism about the business outlook. 

The growth rate touched a 16-month high, well above the long-term average. Indian manufacturers also continued to expand their workforce, with employment rising for the eighteenth straight month in August. Although job creation slowed to its weakest pace since November 2024, it remained historically strong. 

American buyers hold back amid US tariffs

US President Donald Trump imposed a 50 per cent tariff on India, effective August 27. This included a 25 per cent baseline tariff, with an additional 25 per cent levy linked to India’s import of Russian oil. “Increase in US tariffs on Indian goods may have contributed to the slowdown in new export order growth, as American buyers held back on purchases amid tariff-related uncertainty,” Bhandari said.  

Despite this, overall order growth remained resilient, supported by strong domestic demand that helped offset the tariff-driven slowdown. Manufacturers also showed optimism about future output, signalling a positive outlook.