Indian factory growth reached more than 17 years in August, PMI showed
Indian manufacturing activity was expanded at the fastest speed in more than 17 years in August because production was accelerated amid strong demand, which added inflationary pressure, a survey showed on Monday.
The third largest economy in Asia grew on 7.8% which was stronger than expected in the April-June quarter, far above the Reuters median estimate of 6.7%, government data showed on Friday.
Manufacturing output rose 7.7% years-to-year, compared to 4.8% in the previous quarter.
But the 50% sharp tariff for Trump’s administration in US imports from Indian clothing, gems and jewelry, footwear, sports goods, furniture, and chemicals threatened to reduce growth in the future.
Manufacturing account is around 17% of Indian gross domestic product.
The Indian HSBC Manufacturing Purchase Manager Index (INPMI = ECI), compiled by S&P Global, rose to 59.3 in August – the highest since February 2008 – from 59.1 in July. Although, the reading is slightly lower than the initial estimate of 59.8.
PMI reading above 50.0 shows the growth of the temporary activity below refers to the contraction.
“PMI Indian Manufacturing reached another new highest in August, driven by rapid expansion in production. The increase in US tariffs on Indian goods to 50% may have contributed to a little easing in the growth of new export orders, when American buyers refrain from placing orders in the midst of uncertainty rates,” said Pranjul Bhandari, Indian Economic Chief at HSBC.
“The overall growth of order, on the other hand, survives much better, shows that domestic orders remain strong, helping bearings on obstacles related to tariffs on the economy.”
The output sub-index has increased at the strongest speed since the end of 2020, with the company quoting a better harmony between supply and demand.
New orders continued to grow strongly in August, maintaining the fast speed that was seen in July, which was the fastest in almost five years. The company links sustainable expansion with the power of demand and successful advertising campaigns.
However, new export orders grow at softer speeds, marking the weakest expansion in five months, although it is still strong based on historical standards. The manufacturer reports securing new jobs from clients in Asia, Europe, the Middle East and the United States.
The company increases their workforce for the 18th month in a row, although the pace of employment has slowed to be the weakest since November 2024. Although moderate, recruitment remains strong compared to long-term trends.
Inflation pressure increases with input and output prices rising to a height of three months. Input costs continue to increase, although light, with producers report higher prices for bearings, leather, minerals, steel and electronic components.
Conversely, the selling price rises significantly, because the company takes advantage of strong demand conditions to continue costs to customers.
The company also increases their purchasing activities with the fastest speed in 16 months, significantly above the long-term average, because they are trying to rebuild the level of inventory.
Business trust among producers increased in August, recovered from the lowest three years July was supported by demand even when US tariffs obscured the prospect of growth.
Source: Reuters
