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India’s Factory Gauge Hits 17-Year High as China’s Official PMI Contracts for a Fifth Month

Economists question the durability of the bounce, citing a low deflator, new U.S. tariffs, front‑loaded trade.

Employees move copper rod on a pallet on the production line for copper flat wire at the Wellascent factory in Ganzhou, Jiangxi province, China August 14, 2025. REUTERS/Florence Lo/File Photo
Pedestrians walk past an electronic board displaying various companies' share prices, at a business district in Tokyo, Japan, October 31, 2023. REUTERS/Kim Kyung-Hoon/File photo
A general view of a production line of German car manufacturer Mercedes-Benz at a factory, in Rastatt, Germany, June 4, 2025. REUTERS/Christoph Steitz/File Photo
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Overview

  • India’s HSBC/S&P Global manufacturing PMI rose to 59.3 in August, the fastest operating-condition improvement in about 17.5 years, led by strong domestic demand and quicker output growth.
  • Export order growth for Indian manufacturers slowed to a five-month low after U.S. tariff rates on many Indian goods jumped to 50% on Aug. 27, even as factories added jobs for an 18th straight month.
  • India’s real GDP expanded 7.8% year on year in Q1 FY26 while nominal growth eased to 8.8%, with banks and economists warning that a low GDP deflator and early U.S.-bound shipments likely inflated the headline figure.
  • Indian stocks rebounded on the data, with the Sensex up 0.70% to 80,364.49 and the Nifty up 0.81% to 24,625.05, though Reuters highlighted persistent foreign outflows and tariff-related earnings risks.
  • China’s readings stayed mixed as the official manufacturing PMI registered 49.4 in August for a fifth month of contraction, the NBS composite was 50.5, and a private S&P/RatingDog PMI showed expansion at 50.5 while factories shed staff for a fifth month.