India’s Manufacturing PMI Hits 3-Month High, Services Growth Slows

India’s Manufacturing PMI Hits 3-Month High, Services Growth Slows

India’s manufacturing sector is showing positive signs of growth as the Purchasing Managers’ Index (PMI) for August reached a three-month high. This increase can be attributed to a rise in orders and output, indicating a vibrant manufacturing landscape in the country. On the other hand, the services sector witnessed a slowdown in growth after reaching a 13-year high in July.

The PMI data holds significance as it serves as an indicator of the overall health of the economy. Compiled from responses collected from approximately 400 manufacturing and service-sector companies, the PMI figure above 50 indicates expansion, while below 50 suggests contraction.

India’s services PMI has maintained its position in the expansion zone since August 2021, marking its longest stretch since August 2011. Similarly, the manufacturing sector has demonstrated consistent expansion over the past two years.

In August, the manufacturing PMI rose to 58.6 from 57.7 in July, 57.8 in June, and 58.7 in May. This upward trend signifies a positive outlook for the country’s manufacturing sector and its potential contribution to economic growth in the second quarter of FY24.

However, the services PMI for August fell to 60.1 from 62.3 in July, 58.5 in June, and 61.2 in May. While services companies achieved a remarkable milestone by witnessing a record surge in new export business, their growth rate slowed down compared to the previous month.

The composite PMI, which combines both manufacturing and services indices, decreased to 60.9 in August from 61.9 in July.

Despite the slight slowdown in services growth, the positive momentum in the manufacturing sector provides optimism for India’s economic development. The robust increase in new orders and production in the manufacturing sector indicates its potential to contribute significantly to the country’s economic growth in the coming months.

The services sector, although experiencing a slowdown, has still been operating in the expansion zone for an extended period. This resilience suggests that the services industry continues to play a crucial role in India’s economic landscape.

In conclusion, India’s manufacturing PMI hits a three-month high in August, reflecting a flourishing manufacturing sector. Simultaneously, the services sector witnesses a slight decline in growth after reaching a 13-year high in July. These trends indicate a mixed picture for India’s economy, with the manufacturing sector poised to thrive while the services sector experiences a brief slowdown.