India Private-Sector Activity Hits Four-Month High in October as Composite PMI Rises to 56.7

India's Private-Sector Growth Accelerates to Four-Month High

India's private-sector business activity expanded at its fastest pace in four months during October 2026, supported by stronger new orders, improving services activity and easing inflationary pressures.

The HSBC Flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, increased to 56.7 in October from 55.9 in September, according to preliminary survey data released on October 23, 2026.

The reading exceeded the median forecast of 56.1 in a Reuters survey, indicating stronger-than-anticipated expansion across the country's manufacturing and services sectors.

A PMI reading above 50 indicates expansion in business activity, while a reading below 50 signals contraction.

Although the October reading marked the fastest expansion since June, the pace of growth remained below the average recorded during 2026.

The improvement reflects continued resilience in India's private-sector economy, even as businesses remain cautious about recruitment and future operating conditions.

October 2026 PMI Performance Highlights

The preliminary survey indicated stronger overall business activity, with the services sector contributing significantly to the improvement.

The composite index increased by 0.8 points, indicating an acceleration in overall private-sector output growth.

Services activity improved more substantially, while manufacturing production continued expanding at a broadly stable pace.

However, the headline manufacturing PMI declined marginally because of weaker employment growth.

The survey suggests that business activity strengthened primarily through higher demand and production rather than significant workforce expansion.

Services Sector Drives October Business Activity Growth

India's services sector was the principal contributor to the acceleration in private-sector business activity.

The HSBC Flash India Services PMI Business Activity Index increased to 56.2 in October from 55.2 in September.

The improvement reflected stronger demand, rising new business volumes and better operating conditions across service-oriented companies.

Service providers reported increased business activity as customer demand improved during the month.

The services industry plays a central role in India's economy, covering information technology, financial services, transportation, communication, hospitality, professional services and other commercial activities.

Continued expansion in these industries supports domestic economic activity and contributes significantly to employment and business investment.

However, despite stronger output, services companies did not increase their overall staffing levels during October.

The pause in recruitment indicates that businesses were able to manage higher workloads using existing employees.

Manufacturing Output Expands Despite Marginal PMI Decline

India's manufacturing sector continued to record expansion during October, although the headline PMI declined slightly.

The HSBC Flash India Manufacturing PMI decreased to 54.9 from 55.1 in September.

Despite the reduction, the index remained comfortably above the 50-point threshold, indicating continued improvement in overall manufacturing conditions.

The Manufacturing Output Index increased marginally to 57.6 from 57.5, suggesting that factory production maintained a strong expansionary pace.

Manufacturers reported continued growth in output and new orders, supported by domestic and international demand.

The decline in the headline manufacturing PMI was partly associated with slower employment growth.

This distinction is important because the headline manufacturing PMI incorporates several indicators, including output, new orders, employment, supplier delivery times and purchasing inventories.

Consequently, a decline in the headline index does not necessarily indicate falling factory production.

New Orders Strengthen Across Private-Sector Businesses

Stronger new business inflows were an important factor behind the acceleration in India's October private-sector activity.

Companies reported improving market conditions and increased order volumes, supporting higher output across manufacturing and services.

The survey indicated that total new orders expanded at a faster pace than in September.

New business growth reflects customer demand for goods and services and can provide an indication of future production requirements.

For manufacturers, stronger orders may support factory utilisation, procurement activity and production planning.

For service providers, increased demand can translate into higher project volumes, greater business activity and improved revenue opportunities.

However, the sustainability of new order growth will depend on domestic demand conditions, international trade developments and broader economic confidence.

Export Orders Record Fastest Growth in Six Months

International demand provided additional support to India's private-sector expansion during October.

New export orders increased at their fastest pace in six months, according to the HSBC survey.

Businesses reported receiving stronger orders from international markets including the United States, the United Kingdom, the Middle East and Bangladesh.

The improvement was particularly evident among manufacturers, while growth in foreign demand for services moderated.

Stronger export orders suggest that Indian goods producers continued to attract international business despite uncertainty surrounding global trade conditions.

Export demand is important for manufacturing industries because it supports production volumes, capacity utilisation and participation in international supply chains.

However, the uneven performance between manufacturing and services exports indicates that external demand conditions continue to vary across industries.

Hiring Growth Slows to Weakest Pace of 2026

Despite stronger business activity and new orders, employment growth remained subdued during October.

The survey indicated that overall private-sector hiring increased only marginally, marking the slowest pace of job creation recorded so far in 2026.

Employment in the services sector remained unchanged, ending a nine-month sequence of workforce expansion.

Manufacturing companies reported a slight increase in staffing levels, although recruitment remained limited.

Businesses indicated that their existing workforce was sufficient to manage current operating requirements.

This suggests that companies were responding to higher demand through improved utilisation of existing resources rather than substantial recruitment.

The divergence between output growth and employment expansion remains an important development for India's labour market.

Sustained business growth does not automatically translate into immediate employment creation, particularly when companies have sufficient capacity to meet demand.

Outstanding Business Declines as Companies Clear Backlogs

India's private-sector companies reduced their outstanding workloads during October.

Backlogs of work declined for the third time in four months, with the latest reduction matching the strongest pace recorded in approximately six-and-a-half years.

The decline was comparable to the reduction observed in August 2021.

Businesses reported that existing staffing capacity was sufficient to complete pending assignments despite increasing new orders.

Lower outstanding workloads can indicate improved operational efficiency and faster delivery of goods and services.

However, declining backlogs may also reduce the immediate need for additional recruitment if companies can handle new business using current resources.

The October survey therefore highlights the importance of evaluating employment trends alongside output, order growth and business capacity.

Input Cost Inflation Eases to Nearly One-Year Low

Inflationary pressures continued to moderate across India's private sector during October.

Input cost inflation slowed for the seventh consecutive month, reaching its lowest level in almost a year.

The moderation was visible across both manufacturing and services businesses.

Companies nevertheless reported continued increases in certain expenses, particularly steel and transportation costs.

Lower input cost inflation can provide relief to businesses by reducing pressure on operating expenses and procurement budgets.

For manufacturers, slower growth in raw material and transportation costs may support production economics.

For service providers, more stable operating expenses can improve cost visibility and business planning.

However, easing inflation does not necessarily mean that overall input prices are falling. It indicates that prices are increasing at a slower rate.

Selling Price Inflation Falls to Lowest Since March 2025

The survey also recorded a moderation in the pace at which companies increased their selling prices.

Output price inflation slowed to its weakest level since March 2025.

Manufacturing companies reported particularly modest increases in selling prices, with factory-gate price inflation easing to its lowest level in almost four years.

The moderation suggests that businesses were passing on smaller cost increases to customers.

Slower selling price inflation may support purchasing activity by reducing pressure on consumer and business budgets.

It can also contribute to a more stable pricing environment across industries.

However, the relationship between business selling prices and broader consumer inflation depends on several additional factors, including food prices, energy costs and supply conditions.

The October PMI survey provides an early indication of business pricing trends rather than a direct measure of consumer price inflation.

Manufacturers Increase Inventories as Supply Conditions Improve

Manufacturing companies continued expanding their inventories during October.

The survey indicated that stocks of purchases increased at their fastest pace in eight months.

Inventories of finished goods also rose, recording the strongest expansion in the survey's history.

Manufacturers reported that supplier delivery times had shortened, supporting procurement and inventory accumulation.

The increase in inventories may reflect efforts to prepare for future demand, maintain production continuity and manage supply chain requirements.

However, inventory accumulation can have different implications depending on subsequent sales performance.

When demand remains strong, higher inventories can help manufacturers fulfil orders efficiently.

If demand weakens, elevated stocks may increase working capital requirements and storage costs.

The relationship between inventories, production and new orders will therefore remain important in assessing manufacturing conditions.

Business Confidence Improves to Highest Level Since May

Indian private-sector companies reported stronger optimism regarding business activity over the coming 12 months.

Business confidence improved to its highest level since May 2026.

The increase reflected expectations of better market conditions and continued demand growth.

Optimism strengthened across both manufacturing and services companies.

However, overall business confidence remained below the average recorded during 2026.

The findings suggest that companies are increasingly positive about future operating conditions but continue to maintain some caution.

Business confidence is an important forward-looking indicator because it can influence investment decisions, hiring plans, production capacity and expansion strategies.

Sustained improvements in demand and profitability could support stronger investment activity over subsequent quarters.

October PMI Data Highlights Resilience in Indian Economy

The acceleration in private-sector activity provides an indication of continued economic momentum during the opening month of the third quarter of FY27.

Stronger services activity, manufacturing output and new orders suggest that business demand remained supportive.

The improvement in export orders also highlights the contribution of international markets to manufacturing activity.

At the same time, subdued employment growth indicates that businesses are maintaining a cautious approach to workforce expansion.

Easing input costs and slower selling price inflation provide a more favourable operating environment, although companies continue to face sector-specific cost pressures.

For policymakers and investors, the PMI results offer an early assessment of business conditions before official economic output data become available.

However, PMI readings measure changes in business conditions rather than the actual percentage growth of gross domestic product.

Final October PMI Readings Awaited in November

The October figures represent preliminary flash estimates based on approximately 80–90% of the survey responses collected for the month.

The final manufacturing, services and composite PMI readings are expected to be released in early November.

Final results may differ from the preliminary estimates as additional survey responses are incorporated.

Economists will monitor whether the acceleration in new orders and business activity is sustained.

Employment trends, export demand, inflationary pressures and business confidence will also remain important indicators.

The final survey results will provide a more complete assessment of India's private-sector performance during October.

Conclusion

India's private-sector business activity accelerated to a four-month high in October 2026, with the HSBC Flash Composite PMI rising to 56.7 from 55.9 in September.

The improvement was supported by stronger services activity, increased new orders and the fastest expansion in export demand in six months.

Manufacturing production continued to grow, while input cost inflation eased to its lowest level in almost a year.

However, employment growth slowed to its weakest pace of 2026, with services companies reporting unchanged staffing levels.

The October findings indicate continued resilience in India's private-sector economy, although the divergence between stronger output and subdued hiring highlights the need for sustained demand growth.

The final PMI readings in November will provide further clarity on the strength and sustainability of the expansion.