India’s private sector activity hits four-month high as inflation cools: HSBC Flash India PMI
India’s private-sector business activity rose to a four-month high in October, with early survey data pointing to a faster expansion in both manufacturing and services, supported by stronger new orders and easing inflationary pressures.
According to HSBC’s Flash India Purchasing Managers’ Index (PMI), released on Friday, firms secured higher volumes of new business and remained optimistic about the year-ahead outlook due to easing of inflationary pressure.
The flash survey, an advance estimate ahead of the final PMI readings, offers an early indication of shifts in economic sentiment and output.
The HSBC Flash India PMI Composite Output Index, a seasonally adjusted measure of month-on-month changes in the combined output of India’s manufacturing and services sectors compiled by S&P Global, rose to 56.7 in October from 55.9 in September. The reading pointed to a marked expansion in business activity and the fastest growth since June. However, the rate of increase remained below the average recorded so far in 2026, the survey said.
A reading above 50 indicates expansion, while one below 50 signals contraction.
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Manufacturing output continued to expand. The HSBC Flash India Manufacturing Output Index edged up to 57.6 in October from 57.5 in September, signalling improved momentum in factory production.
The services sector also remained strong, with the Flash Services Business Activity Index rising to 56.2 in October from 55.2 in September, reflecting steady demand and healthy business confidence.
The broader HSBC Flash India Manufacturing PMI, which measures overall manufacturing-sector conditions, fell marginally to 54.9 in October from 55.1 in September. The decline was largely attributed to slower job creation, as companies indicated that existing staffing levels were sufficient to handle current workloads.
The final PMI data for October will be released in early November.
The survey showed that new business growth accelerated in October, supported by the fastest increase in new export orders in six months. Companies reported receiving orders from several markets, including the US, the UK, West Asia and Bangladesh.
“The rate of job creation eased, however, and was only marginal as companies had sufficient staffing capacity to deplete outstanding business. Backlogs of work fell modestly and to the largest degree since August 2021,” the survey said.
“The rate of expansion in new business also quickened in October, with total new orders supported by the fastest rise in new business from abroad in six months. Panellists reported receiving new orders from a range of markets, with the US, UK, Middle East and Bangladesh mentioned in particular,” it added.
Despite stronger output and new orders, companies were more cautious about hiring. Employment increased only marginally, at the slowest pace so far this year. Services-sector staffing levels remained unchanged, ending a nine-month sequence of job creation, while manufacturing workforce numbers rose slightly.
“Private-sector manufacturing activity continued to expand, with the growth of output and new orders broadly unchanged at last month’s levels. However, the steady pace of new order growth masks the fastest increase in new export orders since June 2025. Manufacturers responded by increasing their stocks of purchases and finished goods. Input cost inflation eased, while the rise in selling prices softened to its weakest in almost four years,” said Pranjul Bhandari, chief India economist at HSBC.
The survey found that backlogs of work declined for the third time in the past four months. Although modest, the rate of depletion was the joint-strongest in six-and-a-half years, matching the level recorded in August 2021. The latest decline was also among the sharpest since the global financial crisis, the survey said.
Growth in manufacturing-sector purchasing activity eased in October and was the slowest in the current expansionary sequence, which began in July 2021.
Despite the moderation, stocks of purchases increased markedly, recording their strongest rise in eight months as suppliers’ delivery times shortened. Stocks of finished goods also rose as companies responded to higher new orders by building inventories. The rate of expansion in finished-goods stocks was the sharpest on record.
Inflationary pressures continued to ease in October, with input-cost inflation slowing for the seventh consecutive month to its lowest level in almost a year. The moderation was evident in both manufacturing and services, although panellists continued to cite higher steel and transportation costs as sources of input-price pressure.
Output-price inflation also eased, with selling prices rising at the slowest pace since March 2025. The moderation was visible across both sectors, while the increase in manufacturing selling prices was the softest in almost four years, the survey said.
Looking ahead, companies remained optimistic that business activity would increase over the coming year, supported by expectations of stronger market conditions.
Business confidence improved to its highest level since May, although it remained below the average recorded so far in 2026. Optimism strengthened across both manufacturing and services.
The flash PMI data is based on responses from around 400 manufacturers and 400 service providers.
Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He finds reporting to be a passion that provides the necessary adrenaline rush and keeps you going.
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