India business activity reaches four-month high as October hiring stalls

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India business activity October high

Highlights

HSBC's flash India Composite PMI rises to 56.7 in October from September's 55.9, surpassing the 56.1 Reuters poll forecast and signaling expanding activity.
Services PMI climbs to 56.2 while manufacturing PMI slips to 54.9, with subdued hiring and backlogs falling at the joint-fastest pace in nearly 6.5 years.
Input-price inflation eases to the lowest level in almost a year, and output-price growth slows to the weakest since March last year, reducing cost pressures.

October PMI data signals faster output growth

As reported by Reuters, citing S&P Global, HSBC's flash India Composite Purchasing Managers' Index rises to 56.7 in October from September's final 55.9, above the 56.1 median forecast in a Reuters poll. The reading remains above the 50 threshold that separates growth from contraction, indicating continued expansion, although it stays below this year's average.

The services PMI climbs to 56.2 from 55.2, accounting for most of the acceleration in private-sector output. Manufacturing output also edges higher, but weaker recruitment contributes to a decline in the sector's headline PMI to 54.9 from 55.1.

Firms say current staffing levels are sufficient to meet workloads, while overall backlogs fall at the joint-fastest pace in nearly six-and-a-half years. International demand also provides support, with total export orders expanding at the fastest pace in six months, though foreign demand for services softens even as goods producers see stronger orders.

Cooling price pressures ease pressure on companies

Cost conditions improve across both sectors, with input-price inflation easing to its lowest level in almost a year and output-price increases slowing to the weakest pace since March last year. The moderation in price pressures offers some relief for companies even as activity levels strengthen.

Business confidence recovers to its highest level since May, but it remains below this year's average. The survey points to a services-led expansion in India at the start of the final quarter, while muted hiring suggests companies remain cautious about adding staff despite stronger demand.

Our earlier article on India’s widening merchandise trade deficit highlighted how imports outpaced exports in September, keeping the external gap elevated. It also noted that higher energy costs—particularly crude remaining above $100—and geopolitical risks were key factors lifting the import bill, even as India pursued export-market diversification through new and pending trade agreements.

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