52.9: India HSBC Manufacturing PMI Declines in August

India's manufacturing expansion pace slowed in August. Data released by S&P Global and HSBC on Friday showed that India's HSBC Manufacturing PMI flash reading came in at 52.9 in August, down from 53.5 in July. The index remains above the 50 boom-or-bust threshold, indicating the sector is still growing overall, but at a softer pace.

**Demand and Output Expansion Cool**

The latest data suggests that India's manufacturing growth momentum weakened in August. Although output and new orders are still expanding, the overall pace may be dragged down by softer domestic demand. Looking back at July data, the index had already fallen to 53.5, marking the weakest growth level since August 2021, with total sales growth at its slowest in more than four years, largely attributed to challenging market conditions and weaker customer demand. The further decline in the August flash reading hints that this trend is continuing.

**Price Pressures and External Demand Provide a Buffer**

Despite the overall slowdown, some areas still show resilience. July data showed that India's manufacturing export orders had accelerated, with demand coming from multiple countries including Canada, Egypt, and Indonesia. Meanwhile, input cost inflation fell to a five-month low in July, while output price inflation remained moderate, which somewhat eased cost pressures for manufacturers. Whether these factors can continue in August will be a key focus going forward.

**Future Outlook**

In the near term, market sentiment toward India's manufacturing sector remains cautious. According to Trading Economics' global macro model and analyst expectations, India's manufacturing PMI is projected to reach 53.60 points by the end of this quarter. However, fluctuations in domestic demand remain a key uncertainty. In July, business confidence had recovered on expectations of stronger demand and infrastructure spending, but the decline in the August flash may test that optimism.