India’s factory output was on a 17-year high in August, expanding at its fastest pace as demand surged, according to a private survey report revealed on Monday.
S&P Global’s monthly HSBC India Manufacturing Purchasing Managers’ Index (PMI) recorded a figure of 59.3 in August from 59.1 in July. A PMI of 50 or over shows expansion, while anything lower shows contraction in manufacturing. It takes into account surveys of 400 manufacturers.
The index had recorded a reading of 58.4 in June, 57.6 in May, and 58.2 in April, showing constant rise in factory output despite tariff threats by US President Donald Trump on India’s goods. On August 27, a very high tariff of 50 per cent on Indian exports to the US came into effect.
The last time that the PMI had risen to 60 was in 2008.
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“Up from 59.1 in July to 59.3 in August, the seasonally adjusted HSBC India Manufacturing PMI – a single-figure indicator of sector performance – indicated the fastest improvement in operating conditions for 17-and-a-half years,” the survey said, adding that the upward movement in the headline figure largely reflected an acceleration in growth of production volumes.
“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,” it said.
“The strongest sales and output performances were noted in the intermediate goods category, followed by capital and then consumer goods,” it added.
However, there was softer increase in international orders placed with Indian manufacturers in August.
“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,” the survey added.
Having said that, the rise in new orders being sharper prompted firms to step up input purchases on the lines of those undertaken in July.
Besides tariffs, manufacturers will have to weigh in higher costs of bearings, leather, minerals, steel, and other small electronic parts.
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