New Delhi, Sep 2 : The country's manufacturing activity eased to three-month low at 57.5 in the month of August, which is below July's reading of 58.1 but above the long-run average of 54, the HSBC India survey showed on Monday.

The 'India Manufacturing Purchasing Managers' Index (PMI) compiled by S&P Global, stood at 57.5 in August, and the figure signalled a substantial improvement in operating conditions.

The index has been above the 50-mark separating growth from contraction since July 2021 which is the longest expansionary phase in the last 11 years.

According to the report, Indian manufacturers registered softer increases in new business and output during August, albeit with rates of expansion remaining elevated by historical standards. Business confidence retreated, but firms scaled up buying levels in a bid to safeguard against input shortages.

'The latest upturn in pre-production inventories was one of the strongest seen in 19-and-a-half years of data collection. One factor that supported the rise in purchasing activity was a moderation in cost pressures,' the report stated.

The rate of input price inflation softened to the slowest in five months.

'Concurrently, demand resilience meant that firms were comfortably able to share additional cost burdens with their clients by lifting selling prices,' it mentioned.

According to Pranjul Bhandari, Chief India Economist at HSBC, the Indian manufacturing sector continued to expand in August, although the pace of expansion moderated slightly.

'New orders and output also mirrored the headline trend, with some panellists citing fierce competition as a reason for slowdown. Nevertheless, all three indicators remain well above their historical averages,' Bhandari added.

The pace of output price inflation decelerated but to a much smaller extent. Business outlook moderated slightly in August, driven by competitive pressures and inflation concerns.

In July, the manufacturing activity continued to expand at a robust pace on the back of strong domestic demand and new export orders.

The outlook for the coming 12 months remained optimistic with firms still taking on additional staff.

/IANS