India Manufacturing PMI Slips to 54.9 in October as Export Orders Accelerate
Key Facts
The preliminary HSBC India Manufacturing Purchasing Managers’ Index fell to 54.9 points in October from September’s final reading of 55.1, as hiring slowed despite continued growth in output. Survey data showed the index remained above the 50-point level that separates expansion from contraction, meaning the slight decline in the reading does not signal a contraction in the sector. New orders, meanwhile, continued to grow at a pace close to the previous month, while export orders accelerated to their fastest pace since June 2025. This places weaker hiring alongside stronger demand signals, rather than portraying the reading as the result of a broad decline in demand. Broader activity indicators also showed India’s private sector entered October with faster expansion, supported mainly by services.
Pranjul Bhandari, HSBC’s chief India economist, said that "output and new orders growth remained largely at last month’s levels," adding that steady growth in new orders masked "the fastest increase in export orders since June 2025." This is consistent with new orders remaining close to September’s pace, while orders from abroad improved more quickly. Across the private sector, total export orders rose at their fastest pace in six months, according to the Reuters survey. Business optimism also recovered to its highest level since May, signaling improved confidence alongside stronger external orders. Backlogs fell at the fastest joint pace in almost six and a half years, indicating that companies were able to work through existing orders more quickly.
Stronger external demand was not matched by a similar increase in factory hiring: employment rose only marginally, and companies said they had sufficient staffing capacity to handle workloads. This means manufacturers saw little broad need to add staff even as output and new orders continued to expand. In the services sector, employment was unchanged in October, ending a nine-month run of job growth. Reuters said slower hiring helped lower the headline manufacturing PMI reading to 54.9 points. This highlights a divergence between stronger order activity and a labor market that is not keeping pace with the improvement.
On prices, manufacturing input-cost inflation eased, while selling-price increases slowed to their weakest pace in about four years. Bhandari said that "input cost inflation eased, while selling price inflation slowed to its weakest level in about four years." The survey indicates that cost pressures facing manufacturers eased during the month, alongside a slowdown in the pass-through of increases to selling prices. At the same time, companies increased their purchasing inventories at the fastest pace in eight months, while stocks of finished goods rose at the steepest pace on record. This inventory increase puts developments in output and orders in focus as the sector continues to expand.
The preliminary HSBC India Composite Index of private-sector activity rose to 56.7 points in October from 55.9 in September, beating the Reuters poll median forecast of 56.1. Business activity expanded at its fastest pace in four months, with services driving most of the acceleration in private-sector output. The services index rose to 56.2 points from 55.2, while employment in the sector was unchanged, ending a nine-month growth run. The comparison shows the broader improvement in private activity came from services, while the manufacturing reading was slightly below September’s level. The final HSBC India Services PMI for October is scheduled for release on 4 November 2026.
Official industrial production data provide additional context for the survey reading: the index of industrial production rose 6.7% year over year in September, after growth of 8.0% in August, according to India’s Ministry of Statistics and Programme Implementation. By sector, manufacturing recorded annual growth of 7.6% in September, while mining and quarrying contracted 6.2%. These figures cover September and do not represent actual October output, which the official index will report later. India’s October industrial production index is scheduled for release on 30 November 2026. Before then, the final services PMI is due on 4 November, adding an update to the picture of private-sector activity outlined by the preliminary reading.