Increase in Manufacturing PMI: Up to 59.3 in August, a Slight Uptick from July's 59.1
The Indian manufacturing sector has experienced a significant surge in August, with the Manufacturing Purchasing Managers' Index (PMI) reaching a new high of 59.3, the fastest growth in more than 17 years. This robust expansion was driven by strong demand recovery and accelerated production expansion across the country.
The growth in manufacturing activity was primarily due to a rapid increase in production. The underlying data showed a softer increase in international orders placed with Indian manufacturers, but domestic orders remained robust, suggesting a continued expansion in the sector.
Pranjul Bhandari, the chief India economist at HSBC, stated that the increase in US tariffs might have contributed to the slight easing in new export orders growth. The US tariffs on Indian goods took effect on August 27, including a 25% penalty for buying crude oil from Russia. However, the survey results indicate a continued expansion in the manufacturing sector, despite the tariff-related drag on the economy.
The survey results also show a positive outlook for the manufacturing sector in the near future. Manufacturers were confident that the output would increase over the course of the coming 12 months. The strongest sales and output performances were noted in the intermediate goods category in August.
More jobs were created in the manufacturing sector during August, marking the 18th month in a row of job creation. The pace of job creation was historically solid, contributing to the overall expansion in the sector.
However, this expansion in the manufacturing sector has added to inflationary pressures. Companies increased the pace at which additional materials were bought in August, reflecting the increased demand and production activities.
Despite these pressures, the survey did not indicate a contraction in the manufacturing sector in August. The survey results suggest that domestic orders remained robust, offering a glimmer of hope for the sector amidst the challenges posed by the tariffs.
In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. The significant rise of the Indian manufacturing PMI to 59.3 in August, reaching the highest level in 17 years, is a testament to the resilience and growth of the sector in the face of adversity.
