Increase in Manufacturing PMI: August's figure reached 59.3, up from July's 59.1.

India's manufacturing sector experienced a significant boost in August, reaching a 17-year high with a PMI (Purchasing Managers' Index) of 59.3. This surge indicates a robust expansion in the sector, according to reports.

The growth in new orders also improved at a fast pace, suggesting that domestic orders remained robust. Incoming new orders in August rose to the same extent as in July, which was the fastest in 57 months. Firms reported securing new work from clients in Asia, Europe, the Middle East, and the US.

The pace of job creation in August slowed to the weakest since November 2024, but was still historically solid. More jobs were created in August, marking the 18th month in a row of employment growth.

The rise in manufacturing activity in August, though the weakest for five months, was still sharp by historical standards. Companies upped the pace at which additional materials were bought. The strongest sales and output performances were noted in the intermediate goods category, followed by capital and then consumer goods.

However, Pranjul Bhandari, chief India economist at HSBC, stated that the increase in US tariffs on Indian goods might have slightly slowed the growth in new export orders. The tariffs include a 25% penalty for buying crude oil from Russia, making them among the highest in the world. The US tariffs on goods from India increased to 50% on August 27.

Despite this, the survey did not indicate any significant impact of US tariffs on India's manufacturing sector in August. Sectors such as dairy (with India being the largest milk producer globally), packaging (notably offset packaging), and oil importation showed strong performance and growth trends during the period and around that time. The dairy sector is supported by government initiatives and contributes significantly to the economy, while the packaging market saw a digital transformation with automation and sustainability trends driving growth.

The continued optimism for future output among manufacturers is a positive sign. The underlying data showed a softer increase in international orders placed with Indian manufacturers, but the overall picture remains one of expansion and growth.