India’s manufacturing activity surges to 17.5-year high in August on strong demand: PMI

India’s manufacturing activity expanded at the fastest pace in nearly 17-and-a-half years in August, driven by robust domestic demand and a sharp rise in output, a monthly survey said on Monday.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.3 in August from 59.1 in July, marking its highest since early 2008.

A reading above 50 indicates expansion.

The survey highlighted that production volumes grew at the quickest pace in close to five years, fuelled by resilient domestic demand even as growth in international orders softened to a five-month low.

“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.

“The increase of US tariff on Indian goods to 50% might have contributed to the slight easing in new export orders growth… Overall orders growth, on the other hand, held up much better, suggesting that domestic orders remained robust.”

With demand strong, manufacturers stepped up input purchasing at the sharpest rate in 16 months and added jobs for the 18th consecutive month in August. Business sentiment also improved, recovering from a three-year low in July.

Input cost inflation remained moderate and below its long-run average, though firms raised selling prices at the fastest pace in three months, supported by buoyant demand.

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.

The HSBC India Manufacturing PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.