India’s manufacturing PMI fell to a five-year low of 52.8 in August from 53.5 in July, with output and new orders growth weakening.
With weak growth in output and new orders, the manufacturing sector in India continued to show weakness in August, as the Purchasing Managers’ Index (PMI) slipped to a five-year low of 52.8 in the said month, S&P Global reported on Tuesday.It was 53.5 in July. This is the third successive month of decline. PMI is based on responses from purchasing executives of 400 companies. An index above 50 means expansion and below 50 means contraction.Output, employment growth weaken“The output index fell to its lowest level since August 2021, signalling that production is still expanding but at a markedly slower pace,” Pranjul Bhandari, Chief India Economist at HSBC, said. Also, 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,” she added.According to S&P Global, the softer sales environment was reflected in workforce and purchasing decisions. Manufacturing employment fell for the first time in two-and-a-half years, though the rate of decline was only fractional. ”Companies that reduced staffing levels mainly cited lower business requirements,” it said. Further, input buying still expanded for the sixty-second successive month, but at the weakest rate over this period, as some firms restocked while others trimmed purchases in line with softer demand.New business growth slowsFurthermore, demand trends softened across two of the three industrial groups tracked by the survey, with consumer goods the exception. Overall, new business increased at a marked rate, but it was the slowest in five years. Panellists attributed the weaker upturn to challenging market conditions and subdued appetite for some products. Export sales also rose further, with gains reported from markets including Australia, Germany, mainland China, Spain, Thailand and the US. That said, growth of international orders eased from July, the agency said.Input cost pressures easePanellists said that price pressures receded halfway through the second fiscal quarter. Manufacturers continued to face higher costs for materials, including steel, and transport, but the overall rate of inflation was moderate and the weakest for six months. Softer cost pressures helped firms limit increases in their selling prices. The rate of output charge inflation was slight, the slowest in 45 months and below its long-run trend, S&P Global found.Business confidence improvesDespite the softer performance, business expectations strengthened. 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 agency said.Published on September 1, 2026
