India private sector activity hits four-month high in October on strong demand

India's private sector activity accelerated to a four-month high in October, demonstrating robust economic momentum driven by surging domestic order books, stronger export demand, and easing inflationary pressures.

The HSBC Flash India Composite Purchasing Managers' Index (PMI) output index rose to 56.7 in October from 55.9 in September. The index stayed comfortably above the 50 mark that separates economic expansion from contraction, pointing to sustained structural strength across the economy.

Acceleration across services and manufacturing

The pickup in overall growth was bolstered by a strong gain in service sector activity, where the business activity index rose to 56.2 in October from 55.2 in September. Manufacturing output also maintained an impressive tempo at 57.6, virtually unchanged from 57.5 in the previous month.

Pranjul Bhandari, chief India economist at HSBC, noted that private-sector manufacturing activity continued its solid expansion, supported by steady output growth and new order flows. In response to sustained market demand, manufacturers built up their stocks of purchases and finished goods to ensure seamless order delivery.

Export surge and rising business optimism

International demand provided a significant boost to Indian producers and service providers during the month. Export orders expanded at the fastest pace in six months, with panellists highlighting strong new business wins from key global markets including the United States, the United Kingdom, West Asia, and Bangladesh.

Strong order pipelines boosted business sentiment for the year ahead to its highest level since May. Companies expressed confidence that stable domestic economic conditions and growing global footprint will keep market demand elevated over the coming twelve months.

Inflation cools to multi-month lows

On the cost front, input price inflation slowed to its lowest level in nearly a year across the private sector. While higher steel and freight charges added some pressure, overall cost increases remained subdued across both manufacturing and services.

Controlled input costs allowed firms to keep selling prices competitive. Output price inflation moderated to its weakest pace since March, with factory gate price growth easing to its slowest rate in almost four years, providing further relief to buyers and maintaining price stability.

Final PMI figures for manufacturing will be released on 2 November, followed by final services and composite readings on 4 November.