According to a private study, the activity of India's private sector expanded in October at the fastest pace in the last four months, driven by an increase in new orders and improved production in the services sector.
The HSBC Flash India Composite Output Index, which tracks the combined output of the manufacturing and services sectors, rose to 56.7 in October from 55.9 in September. This marked the fastest growth rate since June, although the figure remains below the average for 2026.
The Manufacturing Purchasing Managers’ Index (PMI) fell to 54.9 from 55.1 as job creation in factories slowed down. Meanwhile, the Services PMI Business Activity Index grew to 56.2 from 55.2.
A reading above 50 indicates expansion, while a value below 50 suggests contraction. The composite index has remained above the 50 mark for 63 consecutive months.
Output growth accelerated in both sectors: the industrial output index slightly increased to 57.6 from 57.5. The study noted that improved market conditions and higher volumes of new orders contributed to this growth.
The pace of growth in total new deals accelerated, supported by the fastest growth in international orders in six months. Companies reported increased demand from the US, UK, West Asia, and Bangladesh.
Pranjul Bhandari, HSBC's chief economist for India, stated: 'Private sector activity in manufacturing continued to expand, with output and new order growth remaining generally unchanged compared to the previous month. However, the sustained pace of new order growth hides the fastest growth in export orders since June 2025.'
However, hiring slowed down. According to the survey, employment increased only slightly and at the slowest pace this year. Service firms maintained their headcount without change, ending a nine-month streak of job creation, while manufacturers added staff only marginally.
Work-in-progress inventories decreased for the third time in four months. The study highlighted: 'Although the rate of decline was modest, it was one of the strongest in six and a half years, comparable to August 2021. Furthermore, the latest decrease was one of the sharpest since the global financial crisis.'
Raw material cost inflation fell for the seventh consecutive month to its lowest level in nearly a year. The study reported: 'Weakened growth was observed in both the manufacturing and services sectors. Where input prices rose, higher costs for steel and transportation were mentioned.'
Retail price inflation also slowed to its slowest pace since March 2025, linked to the weakening growth in both sectors. Plant-level costs rose at the gentlest pace in almost four years.
Bhandari added that manufacturers responded by increasing raw material and finished goods inventories. He noted that raw material cost inflation declined, and selling price growth weakened to its weakest in almost four years.
This flash PMI provides an early indicator of final PMI figures for manufacturing, services, and the composite index and is based on approximately 90 percent of monthly survey responses.