Private sector growth in India hits 4-month high in October, but hiring slows
New Delhi, October 23
The private sector business activity in the country expanded at its fastest pace since June in October, supported by stronger new orders across manufacturing and services, even as job creation slowed to its weakest pace of the year, according to the HSBC Flash India Composite PMI.
The Composite Output Index, which measures the month-on-month change in the combined output of India's manufacturing and services sectors, rose to 56.7 in October from 55.9 in September, indicating a marked expansion in business activity.
HSBC said "India's manufacturing and services sectors rose to 56.7 in October from 55.9 in September, pointing to a marked monthly expansion of business activity and one that was the fastest since June. That said, the rate of increase remained below the average seen across 2026 so far."
The increase in output was supported by improving market conditions and higher volumes of new orders. New business also expanded at a faster pace in October, with overseas demand strengthening. New business from abroad recorded its fastest increase in six months, with survey respondents reporting orders from markets including the US, the UK, the Middle East and Bangladesh.
Despite the improvement in business activity and new orders, companies remained cautious about hiring.
It said, "Despite the sharper rises in output and new orders, companies in India were more cautious around hiring decisions in October. In fact, employment increased only marginally and at the slowest pace in the year-to-date."
Staffing levels in the services sector remained unchanged, ending a nine-month sequence of employment growth, while manufacturing employment increased slightly.
Companies indicated that their existing workforce was sufficient to manage current workloads, reducing the need to recruit additional staff.
The slower pace of hiring came alongside a decline in outstanding business. Backlogs of work fell for the third time in the past four months, with the rate of decline matching the pace recorded in August 2021. The report described the latest fall as one of the sharpest since the global financial crisis.
Meanwhile, the HSBC Flash India Manufacturing PMI declined slightly to 54.9 in October from 55.1 in September, reflecting slower growth in the manufacturing sector following a slowdown in job creation.
Growth in manufacturing purchasing activity also eased to its slowest pace since the current expansion began in July 2021. However, stocks of purchases increased at their fastest rate in eight months as suppliers' delivery times shortened. Manufacturers also increased their stocks of finished goods in response to higher new orders, with the rate of inventory expansion reaching a record high.
Inflationary pressures continued to ease during the month. Input cost inflation slowed for the seventh consecutive month to its lowest level in almost a year, with weaker increases reported across both manufacturing and services.
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 during 2026 so far.
— ANI
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