India's private sector activity expanded at its fastest pace in four months during October, according to the latest HSBC Flash India Composite Output Index. The composite index rose to 56.7 in October from 55.9 in September, marking the strongest growth since June. As reported by HSBC, this expansion was driven by firms securing greater volumes of new orders and improving market conditions. The growth came in above the Reuters poll median forecast of 56.1, suggesting healthy momentum despite remaining below this year's average. According to HSBC Chief India Economist Pranjul Bhandari, the index remained below its average level for 2026 so far, indicating that while growth accelerated, it still lagged behind the year's overall performance. The reading was 60.4 a year ago, highlighting the current growth trajectory.
The Services PMI Business Activity Index rose to 56.2 from 55.2, driving the majority of the acceleration in private-sector output. The Manufacturing Purchasing Managers' Index (PMI) edged up to 57.6 from 57.5, with manufacturing companies reporting stronger output and new orders broadly unchanged at last month's levels. However, the Manufacturing PMI declined slightly to 54.9 from 55.1 as job creation in factories slowed, with the rate of growth in purchasing activity also easing to the slowest in the current sequence of expansion stretching back to July 2021. The rate of expansion was the sharpest on record, though the slowdown in job creation caused the manufacturing PMI to tick down. Companies said existing staffing was sufficient to handle workloads, with overall backlogs falling at the joint-fastest pace in nearly six-and-a-half years since August 2021, representing one of the sharpest falls since the global financial crisis.
Export orders recorded their fastest rise in six months, with firms reporting stronger demand from the US, the UK, West Asia and Bangladesh. As noted by HSBC, growth in total new business also quickened, supported by the fastest increase in new business from abroad in six months. According to HSBC's Pranjul Bhandari, the steady pace of new order growth masks the fastest increase in new export orders since June 2025, suggesting that while overall new orders remained broadly stable, export-focused companies showed particularly strong momentum. However, the improvement was concentrated among goods producers as the growth in foreign requests for services weakened, suggesting mixed performance across different sectors of the export market. Companies reported receiving new orders from a range of markets, with the US, UK, Middle East and Bangladesh mentioned in particular.
Employment growth lost momentum, with hiring rising only marginally and at the slowest pace so far this year, ending a nine-month hiring streak. According to the survey, services firms halted net job additions after nine consecutive months of workforce expansion, while manufacturing firms continued to add workers, albeit only marginally. However, employment across the private sector increased slightly in October, as firms remained reluctant about hiring, citing sufficient staffing levels to meet current workloads. Business confidence for the coming year strengthened to its highest level since May, driven by expectations of further improvements in market conditions. This cautious approach to hiring reflects companies' assessment that existing workforce capacity is adequate for current demand levels.
Input cost inflation eased for the seventh straight month to its lowest level in almost a year, with weaker rises seen across both manufacturing and services sectors due to higher steel and transportation costs. As reported by HSBC, manufacturers responded by increasing their stocks of purchases and finished goods, with stocks of purchases rising markedly and to the largest degree in eight months amid shortening suppliers' delivery times. Selling price inflation also eased to its slowest pace since March 2025, with weaker increases across both sectors. Factory-gate charges rose at the softest pace in almost four years. According to HSBC's Pranjul Bhandari, the rise in selling prices softened to its weakest in almost four years, reflecting the broader trend of easing inflationary pressures across the economy. This price moderation, combined with manufacturers' increased inventory levels, suggests companies are adopting a more cautious approach to pricing and production planning in the current economic environment.
