India's factory sector had a powerful expansion in August, driven by new orders and solid production, as shown by the HSBC India Manufacturing Purchasing Managers' Index (PMI) that climbed to 59.3 from July's 59.1, a report said on Monday.
Statistics from S&P Global saw that this PMI reading was the quickest growth in operating conditions in 17 and a half years. Most of this was fueled by domestic demand, with factories crediting growth to effective advertising campaigns.
"India's manufacturing PMI registered another new high in August, led by a sharp rise in production," wrote Pranjul Bhandari, chief India economist at HSBC.
The report indicated that intermediate goods experienced the best output and sales performance, followed by consumer and capital goods. Companies also showed increased stocks of input, while finished products' inventories grew for the first time in nine months.
There was a slight increase in foreign orders, and firms sped up buying raw materials and stepped up recruitment, partly driven by optimism regarding the business environment. Indian producers kept hiring more workers, with jobs increasing for the eighteenth straight month in August.
Manufacturers' optimism regarding production in the future underpinned these favorable spending patterns, as overall sentiment recovered from a three-year low last July, the report said.
The report highlighted that the headline PMI rise was primarily fueled by more rapid expansion in production levels, the fastest growth in almost five years.
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