MUMBAI: Manufacturing activity in India touched a 17.5-year high in August, with the Purchasing Managers’ Index (PMI) rising to 59.3 from 59.1 in July, according to a private survey released Monday. The surge was driven by strong pre-festive domestic demand, which more than offset the slowdown in export orders caused by the new 50% punitive tariffs imposed by the US on Indian goods late last month.
The survey, compiled by S&P Global and published by HSBC, showed that overall order growth remained resilient, supported by robust local demand. The report noted that the uptick in the headline PMI reflected an acceleration in production volumes, with the pace of expansion being the fastest in nearly five years.
“The manufacturing PMI has hit another new high in August, driven by a rapid expansion in production,” said Pranjul Bhandari, the chief economist at HSBC India. The expansion signals that domestic demand has cushioned export slowdown as new orders continued to flow in strongly, matching July’s pace, which was the fastest in 57 months.
The strongest sales and output performances came in the intermediate goods category, followed by capital and then consumer goods, Bhandari said, adding it can be noted that flash PMI had surged to 65.2 in August on record services, which was the highest on record since data collection began in 2000, while the final services PMI for June had hit a 10-month high of 60.4.
The survey showed that there was a softer increase in international orders, with the rise being the weakest in the last five months. Firms reported securing new work from Asia, Europe, West Asia and the US. Much of this strength came from domestic buyers, with manufacturers pointing to successful advertising campaigns. International demand, however, showed signs of strain.
Export orders increased at the slowest pace in five months, a trend analysts linked to the recent hike in US tariffs on Indian goods. In another positive sign, job creation remained solid for the 18th month, as companies accelerated purchases of additional materials which demanded adding more jobs, partly driven by optimism about the business outlook. “Manufacturers continued to expand their workforce, with employment rising for the 18th straight month in August, which though is at its weakest pace since November 2024.
The survey also noted that American buyers have been holding back amid the punitive US tariffs of 50% that kicked in from the last week of the month. “The increase in US tariffs may have contributed to the slowdown in new export orders, as American buyers held back on purchases amid tariff-related uncertainty,” Bhandari said. Despite this, overall order growth remained resilient, supported by strong domestic demand that helped offset the tariff-driven slowdown. Manufacturers also showed optimism about future output, signalling a positive outlook, she added.