Manufacturing accounts for around 17% of India’s gross domestic product. With frontloading of production to complete the pre-50% tariff exports, Purchasing Managers Index (PMI) for manufacturing sector rose to 59.3 in August as against 59.1 of July, S&P Global reported on Monday. Good news is that fresh job creation rose for 18 successive months, though pace was slow. The PMI is based on responses from Purchasing Managers of 400 companies. Index above 50 means contraction, while below 50 index indicates contraction. “India’s manufacturing PMI hit another new high in August, driven by a rapid expansion in production,” Pranjul Bhandari, Chief India Economist at HSBC, said. Further she added that the increase of US tariff on Indian goods to 50% 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. According to S&P Global, the rate of expansion was the quickest in close to 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 strongest sales and output performances were noted in the intermediate goods category, followed by capital and then consumer goods,” it said.
A steep US tariff of 50% on goods from India took effect on August 27. The tariffs — among the highest in the world — include a 25% penalty for buying crude oil from Russia. 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. In addition to demand buoyancy, survey participants linked growth to advertising success. “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. Talking about job, the survey report highlighted that Indian manufacturers loosened the purse strings when it came to employment, which rose for the eighteenth month in a row during August. Despite slowing to the weakest since November 2024, the pace of job creation was historically solid, it added. 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.
Source : https://www.thehindubusinessline.com/economy/indias-factory-growth-hits-more-than-17-year-high-in-august-pmi-shows/article69998772.ece
