Mint Quick Edit | PMI cheer: Indian factories are in high gear

4 months ago 7

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The growth pace of overseas orders slowed last month, but remains strong in the context of trade turmoil.

Summary

Factory momentum was not lost after the first quarter’s GDP outperformance, suggests a well-watched index. The question is whether a domestic festive boom can keep factories whirring even as US tariffs begin to bite.

After India’s April-June GDP outperformance, we have a fresh data reading that suggests Indian factories have lost no momentum in the quarter that’s underway. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) released on Monday shows a rise to 59.3 in August, the highest in more than 17 years.

Also Read: Mint Quick Edit | Indian factories are bustling with orders

While the past few months have logged readings in the high 50s, well above the 50 mark that separates expansion from contraction, a level near 60 points to factories bustling with orders. The growth pace of overseas orders slowed last month, but remains strong in the context of trade turmoil.

Also Read: Thriving amid chaos: India’s GDP uptick is good news but the hard part comes now

Meanwhile, a separate PMI measurement for China showed a fifth-consecutive month of sub-50 readings. Much of Asia has been bruised by US tariffs, including China, despite Beijing having struck a trade deal with Washington. India’s export exposure to the US is far less and that means domestic demand is a heavier driver of economic growth.

Also Read: Mint Quick Edit | Can India’s China drift cure America’s myopia?

That said, the impact of US action lies ahead of us. Efforts to diversify our export markets are underway, but the need for robust festive season sales can’t be overemphasized. A boom would stand out on the world map of big markets.

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