India's factory growth reaches 17-year high in August, PMI shows

India's factory growth reaches 17-year high in August, PMI shows

India's manufacturing sector experienced a significant surge in August, with the HSBC India Manufacturing PMI hitting its highest level in over 17 years. The PMI, compiled by S&P Global, rose to 59.3 in August, up from 59.1 in July [1]. This robust growth is driven by strong demand and a rapid expansion in production, which has added to inflationary pressures.

The HSBC India Manufacturing Purchasing Managers' Index (INPMI=ECI) reached 59.3 in August, indicating a strong expansion in manufacturing activity. This marks the highest reading since February 2008 [1]. The output sub-index increased at the strongest pace since late 2020, reflecting better alignment between supply and demand [1].

New orders grew robustly in August, maintaining the brisk pace seen in July, which was the fastest in nearly five years. Firms attributed this sustained expansion to demand strength and successful advertising campaigns [1]. However, new export orders grew at a softer pace, marking the weakest expansion in five months, though still remaining strong by historical standards [1]. Manufacturers reported securing new work from clients in Asia, Europe, the Middle East, and the United States [1].

The pace of job creation slowed in August, marking the weakest since November 2024, but hiring remained strong compared to long-term trends [1]. Inflationary pressures increased with both input and output prices rising to a three-month high. Input costs continued to rise mildly, while selling prices rose markedly due to robust demand conditions [1].

Business confidence among manufacturers improved in August, recovering from July's three-year low, supported by demand despite the U.S. tariffs clouding the growth outlook [1].

The strong performance of India's manufacturing sector is a significant indicator of the country's economic health. However, the impact of the Trump administration's steep 50% tariff on U.S. imports of Indian goods, such as garments, gems and jewelry, footwear, sporting goods, furniture, and chemicals, may dampen growth in the coming quarters [1].

References:
[1] https://m.economictimes.com/news/economy/indicators/indias-factory-growth-hits-more-than-17-year-high-in-august-pmi-shows/articleshow/123626826.cms