01 September,2026 01:50 PM IST | New Delhi | mid-day online correspondent
Representational Image. File pic.
India's manufacturing sector, despite expanding to 52.8 in August, slipped to a five-year low amid softer demand, according to news agency PTI.
The seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) declined from 53.5 in July to 52.8 in August. This is the weakest improvement in the manufacturing sector for five years.
Despite the decline, the index remained above the 50-mark that separates expansion from contraction.
The HSBC PMI measures the month-on-month change in the combined output of India's manufacturing and services sectors and is an economic indicator of the business environment.
"India's final manufacturing PMI slipped to 52.8 in August, extending its decline for a third consecutive month. The output index fell to its lowest level since August 2021, signalling that production is still expanding but at a markedly slower pace," said Pranjul Bhandari, Chief India Economist at HSBC.
The lower expansion was attributed to softer demand conditions and difficult market conditions in certain products. This subsequently led to marginal increases in buying levels and stocks, as well as a slight decline in employment.
The HSBC India Manufacturing PMI is compiled by S&P Global based on responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
The expansion rate for export sales moderated in August while compared to the previous month. The international sales were led by demand from key markets such as Australia, Germany, mainland China, Spain, Thailand, and the US.
The manufacturing employment declined for the first time in two-and-a-half years, albeit marginally, as companies trimmed their staff levels due to lower business requirements.
"Employment edged into a mild contraction in August, the first decline after more than two years of job growth. Meanwhile, input cost pressures continued to ease, and manufacturers responded by raising selling prices more modestly," Bhandari said.
Manufacturers had to cope with higher costs for materials, including steel, and transport, despite the overall inflation rate being the weakest in six months.
However, with the moderate inflation meant the output price inflation rose only marginally, hitting a 45-month low and remaining beneath its long-term average.
Although the demand condition softened, businesses expressed confidence. Around 16 per cent of survey participants forecast higher output over the coming 12 months, while the remainder expect no change from present levels.
"Confidence rose to its highest mark since May, but remained subdued by historical standards," the report said.
(With inputs from PTI)
