Private sector activity hits four-month high

India’s private sector activity gained further momentum in October compared to September, with manufacturing reporting stronger performance compared to services, according to Flash Purchasing Managers’ Index (PMI) data released by S&P Global on Friday. The composite index reached a four-month-high as new orders rose and inflationary pressures eased this month.

“Private-sector manufacturing activity continued to expand, with growth of output and new orders broadly unchanged at last month’s levels,” said Pranjul Bhandari, chief India economist at HSBC.

The headline indicator, HSBC Flash Composite PMI Output Index, which accounts for both services and manufacturing activity, increased from 55.9 in September to 56.7 in October. The HSBC Flash Services PMI Business Activity Index increased to 56.2 in October from 55.2 last month. While the other component of the composite index, HSBC India Manufacturing PMI Output remained flat in October recording an expansion of 57.6, similar to 57.5 observed in September. A PMI value above 50 separates expansion from contraction; all four indices showed expansion this month.

While PMI Manufacturing output measures only factory production, PMI Manufacturing is a weighted average of five indicators, looking at overall factory conditions including new orders, output, employment, suppliers’ delivery time and stock of purchases. The Manufacturing PMI largely remained flat at 54.9 compared to 55.1 observed in September.

Flash data are calculated from around 80-90% of total survey responses and are intended to provide an early indication of the final readings.

Firms cited improving market conditions and an increase in new order volumes for the rise in output. New business increased in October, as firms received higher new orders from abroad, the highest in six months. The firms reported gains particularly from the US, UK, Middle East and Bangladesh.

Though output and new orders increased in October, employment increased only marginally and at the slowest pace observed this year. Service hiring levels showed no change, ending a nine-month sequence of job creation. Manufacturing staffing levels did increase marginally, but the lower hiring levels led the HSBC Flash India Manufacturing index to expand at a slower pace.

Backlogs of work decreased in October, although modest, this was the strongest decrease in six-and-a-half years, the same level as seen in August 2021. This was among the sharpest since the Global Financial Crisis.

October marked a continued reduction in inflationary pressure. Input cost inflation reached its lowest point in almost a year. Weaker rises were seen across both the manufacturing and services sectors. Increase in input prices was mostly due to higher steel and transportation costs. As input cost inflation remained contained, firms did not increase output prices; consequently, the rate of output price inflation was the slowest since March 2025. Both sectors recorded weaker inflation, but the manufacturing sector’s increase in output inflation was the slowest in almost four years.

Business sentiment strengthened in October for the year ahead, as firms expect market conditions to strengthen further. Business confidence reached its highest since May, but still remains below the average seen during 2026.

Final figures for manufacturing PMI and services and composite PMI will be released on 2nd and 4th November, respectively.