India's Private Sector Activity Surges to 4-Month High, But Hiring Hits Yearly Low
India's private sector activity surged in October, but hiring hit its slowest pace of the year. Discover the latest HSBC PMI insights here.
India's private sector has witnessed a significant boost in business activity, reaching its fastest expansion since June. According to the latest HSBC Flash India Composite PMI, the combined output of the manufacturing and services sectors climbed to 56.7 in October, up from 55.9 in September. This jump indicates a strong monthly expansion, though it remains slightly below the overall average seen throughout 2026.
Strong Demand and Global Interest
The surge in business activity was primarily driven by improving market conditions and a substantial rise in new orders. A key highlight of the October data is the resurgence of overseas demand, which grew at its quickest pace in six months. Companies reported a strong influx of orders from several major international markets, including:
- The United States
- The United Kingdom
- The Middle East
- Bangladesh
The Hiring Paradox: Growth Without Jobs
Despite the optimism surrounding output and new orders, a concerning trend has emerged in the labor market. Companies have become notably cautious about recruitment, leading to the slowest pace of job creation seen so far this year.
The impact was felt differently across sectors. In the services sector, employment levels remained completely flat, bringing an end to a nine-month streak of continuous growth. While the manufacturing sector saw a slight increase in staffing, the overall trend suggests a cooling of the hiring market.
According to the report, many firms believe their current workforce is sufficient to handle the existing workload, which has effectively removed the urgency to hire new employees.
Backlogs and Manufacturing Shifts
Another striking detail from the report is the decline in outstanding business. Work backlogs fell for the third time in four months, with the rate of decline being one of the sharpest witnessed since the global financial crisis, matching levels seen in August 2021.
Looking specifically at the industrial side, the HSBC Flash India Manufacturing PMI dipped slightly to 54.9 from September's 55.1. This reflects a general slowdown in job creation within the sector. Additionally, purchasing activity eased to its lowest growth rate since the current expansion cycle began in July 2021.
Inventory and Supply Chain Trends
Despite the slower purchasing growth, manufacturers have been stocking up. Stocks of purchases grew at the fastest rate in eight months, aided by shorter delivery times from suppliers. Furthermore, the rate of inventory expansion for finished goods reached a record high as companies prepared for the influx of new orders.
Inflation Eases and Confidence Rises
On a positive note, the pressure of rising costs is beginning to fade. Input cost inflation slowed for the seventh month in a row, reaching its lowest level in nearly a year across both the services and manufacturing industries.
Looking toward the future, business confidence has rebounded to its highest level since May. While it hasn't yet surpassed the 2026 average, companies remain optimistic that market conditions will continue to strengthen, fueling further business activity in the coming year.