August Sees India's Manufacturing PMI Soar To 58.6, Second Best Improvement In Three Years

New Delhi, Sept 1 (KNN) The S&P Global Manufacturing Purchasing Managers' Index (PMI) surged to 58.6 in August, marking the second most significant enhancement in the sector's health in nearly three years, following its recent three-month high of 57.7 in July.

In August, new orders and production experienced their most rapid growth in almost three years. Production continued to increase for the twenty-sixth consecutive month, reaching its highest level in nearly three years.

“Firms geared up to handle rising demand by scaling up buying levels and rebuilding their input stocks at the second-strongest pace in 18-and-a-half years of data collection. On the price front, cost inflationary pressures accelerated but there was a slower uptick in selling charges,” S&P said in a release. 

While demand strength was key to August's performance, competitive pricing and advertising were also cited as factors behind sales growth. 

“Not only did new export orders increase for the seventeenth month running halfway through the second fiscal quarter, but also to the greatest extent since November 2022,” S&P said.

De Lima, economics associate director at S&P Global Market Intelligence said, “The PMI results for India painted a vibrant picture of the nation's manufacturing landscape in August. Robust and accelerated increases in new orders and production suggest that the sector looks set to provide a strong contribution to second quarter (fiscal) economic growth.”

In August, manufacturers acquired extra raw materials and semi-finished goods, with procurement levels witnessing a sharp and one of the swiftest increases observed in over a decade.

Price dynamics in August exhibited a mixed pattern, with input costs rising more rapidly, in contrast to a milder increase in factory gate charges. The latter grew at the slowest pace in four months, while cost inflation reached its most robust level in a year.

"The presence of stronger cost inflationary pressures serves as a reminder of the challenges inherent in managing growth. Firms addressed rising input prices by lifting selling charges. However, the need to maintain competitiveness helped restrict charge inflation," said De Lima. 

While Indian manufacturers did hire permanent and temporary staff on both part and full-time basis, as new orders flowed in, overall employment rose at the slowest pace in four months, reports Business Insider.

“Although historically elevated, the overall level of positive sentiment slipped to a three-month low due to inflation concerns,” S&P said.  (KNN Bureau)