India’s manufacturing PMI jumps to 13-month high at 52.6 in August

India’s manufacturing activity expanded at its fastest pace in 13 months in August, with pickup in demand from domestic and external markets. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 52.6 in August from 51.8 in July.

Manufacturing PMI showed positive momentum at the beginning of second semester, carried over into August, with expansion rates for new work, buying levels and production accelerating further. The new orders sub-index, which takes into account both domestic and external demand, was 54.8 in August - its highest since December 2014 and indicating robust demand for Indian manufactured goods. Buying levels were also raised, as companies attempted to build inventory levels. The upturn in purchasing activity was moderate, but the rate of growth was at a 12-month high.

According to survey, higher prices paid for petrol and other raw materials led overall cost burdens faced by Indian manufacturers to rise further. Further survey highlighted an increasing degree of pressure on the capacity of manufacturers’ operations as backlogs rose to the greatest extent since December 2013. On the price front, softer increases in input costs and output charges and, in both cases, inflation rates were below their respective trends.

Sharp upturn was seen in new business inflows, which expanded at the fastest pace since December 2014. Consumer goods producers led the increase, and solid growth was also seen in the intermediate and capital goods categories.