Private sector activity hits four-month high

India's private sector activity surged in October, reaching a four-month high, according to new data released by S&P Global. Manufacturing and services sectors both contributed to the growth, with the composite index climbing to 56.7 from 55.9 in September. New orders and increasing output were the main drivers behind the expansion, while inflationary pressures eased.

HSBC's chief India economist, Pranjul Bhandari, noted that private-sector manufacturing activity continued to expand, with output and new orders remaining stable at the previous month's levels. The HSBC Flash Composite PMI Output Index, which includes both services and manufacturing activity, rose from 55.9 to 56.7. HSBC India Manufacturing PMI Output remained steady at 57.6, similar to the 57.5 observed in September.

The manufacturing PMI, which measures factory production, remained flat at 54.9 compared to 55.1 in September. The rise in output was attributed to improving market conditions and a surge in new order volumes, particularly from the US, UK, Middle East, and Bangladesh. Despite the growth, employment only increased slightly, signaling the slowest pace of job creation this year.

Service hiring levels remained unchanged, ending a nine-month streak of job creation. Manufacturing staffing levels rose marginally, but the limited hiring contributed to a slower expansion rate of the HSBC Flash India Manufacturing index. Backlogs of work decreased in October, marking the strongest drop in six-and-a-half years.

Inflationary pressures continued to decrease, with input cost inflation hitting its lowest point in nearly a year, largely due to reduced steel and transportation costs. Output price inflation also remained subdued, reaching the slowest pace since March 2025. Business sentiment for the upcoming year improved, with firms anticipating further strengthening of market conditions.

Business confidence hit its highest level since May, although it still lags behind the average seen during 2026.