Manufacturing PMI Rises to 59.3 From July’s 59.1

New Delhi: Encouraging the growth trend of the Indian economy, the country’s manufacturing activity expanded at its fastest pace in more than 17 years in August as production accelerated amid strong demand, which added to inflationary pressures. The manufacturing sector Purchasing Managers' Index or PMI rose to 59.3 from July’s 59.1, a private survey showed on Monday.

With incoming new orders, the seasonally adjusted HSBC India manufacturing PMI, however, indicated the improvement at the fastest pace in operating conditions and rose to a 17-and-a-half-year high of 59.3 in August from 59.1 in July. In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

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

The steep hike of US tariff of 50 per cent on goods from India took effect on August 27. The tariffs – among the highest in the world – include a 25 per cent penalty for buying crude oil from Russia. However, the 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. Meanwhile, incoming new orders rose to broadly the same extent as in July, which was the fastest in 57 months,” the survey said.

“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. Manufacturers’ continued optimism for future output is a positive sign,” Bhandari said.

According to the survey, during August, companies upped the pace at which additional materials were bought, and more jobs were created, partly reflecting positive expectations regarding the outlook. “The strongest sales and output performances were noted in the intermediate goods category, followed by capital and then consumer goods,” it said.

On the job front, the survey pointed out that employment rose for the 18th month in a row during August. “Despite slowing to the weakest since November 2024, the pace of job creation was historically solid as manufacturers were confident that the output would increase over the course of the coming 12 months,” it added.