At 59.3, manufacturing PMI rises to nearly 18-year high in August

Improvements in demand continued to underpin robust increases in factory orders and production

Driven by improvement in demand, India’s manufacturing activity continued its strong run in August, despite concerns over steep US tariffs, showed a private survey released on Monday. The manufacturing purchasing managers index (PMI) touched a nearly 18-year high of 59.3 during the month.

 

 Earlier in July, the HSBC India Manufacturing PMI, compiled by S&P Global, had risen to a 16-month high of 59.1.

 

“Indian manufacturing growth gained further momentum in August, with ongoing improvements in demand continuing to underpin robust increases in factory orders and production. In August, the seasonally adjusted HSBC India manufacturing PMI – a single-figure indicator of sector performance – indicated the fastest improvement in operating conditions for 17 and a half years,” the survey said.

 

 

The survey noted that the upward movement in the headline figure largely reflected an acceleration in growth of production volumes as the rate of expansion was the quickest in nearly five years.

 

“When explaining the rise, panel members pointed to a better alignment of supply with demand. 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 survey said.

 

The strongest sales and output performances were noted in the intermediate goods category, followed by capital and then consumer goods.

 

A figure above 50 in the survey denotes expansion in activity, while a figure below that signifies contraction. The headline figure has been in the expansion zone for the 50th month running. 

 

Pranjul Bhandari, chief India economist at HSBC, said that 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 per cent 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.

 

“Overall order 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. Manufacturers’ continued optimism for future output is a positive sign,” she added.

 

On the export front, the survey noted 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,” it said.

 

Regarding input costs, the survey noted that it continued to increase, with bearings, leather, minerals, steel and small electronic parts featuring in the report's “up in price” list. The overall rate of inflation was, however, moderate and below its long-run average. Conversely, 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.

 

Meanwhile, despite slowing to the weakest since November 2024, the pace of job creation was reported to be historically solid.