Indian Manufacturing Activity Eases to Three-Month Low in August, Remains Strong
India’s manufacturing sector experienced a slight deceleration in activity in August, with the Manufacturing Purchasing Managers’ Index (PMI) registering a three-month low of 57.5, according to the HSBC India survey released on Monday. This reading is a decrease from July’s 58.1 but remains significantly above the long-run average of 54.
Compiled by S&P Global, the PMI figure of 57.5 indicates continued robust operating conditions within the sector. The index has been above the critical 50-mark, which separates growth from contraction, since July 2021, marking the longest period of expansion in over a decade.
The survey highlights a softer increase in new business and output compared to previous months, though the rates of expansion remain strong relative to historical norms. Business confidence experienced a retreat; however, manufacturers increased their purchasing levels to mitigate against potential input shortages. Notably, the rise in pre-production inventories was among the strongest recorded in nearly 20 years, attributed to a moderation in cost pressures.
Input price inflation eased to its slowest rate in five months, allowing firms to manage cost increases by adjusting selling prices without significantly impacting demand. Pranjul Bhandari, Chief India Economist at HSBC, noted that while the pace of expansion in August was slightly moderated, the manufacturing sector continued to grow, with new orders and output reflecting the overall trend.
The report also pointed out that competition and inflationary pressures contributed to a slower rate of output price inflation, although the deceleration was limited. Despite these challenges, the business outlook for the next 12 months remains positive, with companies continuing to hire additional staff to support growth.
July’s manufacturing activity had seen robust expansion driven by strong domestic demand and new export orders, and while August showed some cooling, the sector’s overall performance continues to be optimistic.
