In October, the HSBC Flash India Composite PMI Output Index rose to 58.6, indicating a faster pace of expansion in India’s economy. This marked the thirty-ninth consecutive month of growth, with the figure surpassing the long-term average. The growth was driven by increases in both manufacturing production and services activity, with the manufacturing sector leading the way. The manufacturing PMI climbed to 57.4, while the Manufacturing Output Index reached 60.1. This improvement was supported by a sharp increase in new orders and export sales, reflecting an improvement in international demand for Indian goods and services.
The services sector also saw progress, with the Business Activity Index rising to 57.9. Pranjul Bhandari, Chief India Economist at HSBC, noted that the manufacturing industry regained growth momentum in October. New orders and new export orders expanded at faster rates, providing a positive outlook for industrial production in the coming months. However, input price inflation continued to pick up pace, putting pressure on manufacturers’ profit margins. Businesses responded by raising output prices to pass on the higher costs to consumers.
Hiring activity surged in both the service and manufacturing sectors, with the strongest growth in overall employment since February 2006. Businesses added full-time and part-time workers, with an increase in permanent and temporary contracts to meet demand. Capacity pressures slightly rose in October, leading to more pronounced hiring in the service industry. Input cost inflation reached a three-month high, with price increases reported for various commodities such as chemicals, steel, and food products.
Manufacturers saw the sharpest rise in selling prices in 11 years, as they sought to pass on higher costs to consumers. Overall, business confidence remained above the long-term average, indicating that companies expect demand conditions to remain favorable despite inflationary challenges. While manufacturing sentiment improved to its highest level since July, optimism in the services sector faded slightly. The data suggests a positive outlook for India’s economy, with strong growth in both manufacturing and services contributing to overall expansion.
