India Business Activity Hits Four-Month High in October 2026

India’s private-sector economy showed renewed momentum in October, driven by stronger business orders and improved performance in services, according to preliminary survey findings released on 23 October.

The HSBC Flash India Composite Output Index, compiled by S&P Global, rose to 56.7 in October from September’s final reading of 55.9. The latest figure represented the fastest expansion since June, although it remained below the average recorded during 2026 so far.

The PMI is a survey-based indicator of business conditions. A reading above 50 signals expansion compared with the previous month, while a reading below 50 indicates contraction. The composite index combines information from manufacturing and services businesses.

Services sector drives the improvement

Services activity was the main contributor to the stronger overall reading. The Flash Services Business Activity Index increased to 56.2 in October from 55.2 in September.

Stronger demand and an increase in new business supported activity across the private sector. The improvement suggests that businesses continued to receive orders despite uncertainty in the broader global economic environment.

Manufacturing also remained in expansion territory, although its headline index edged down. The Manufacturing PMI slipped to 54.9 from 55.1 in September, reflecting slower recruitment even as output continued to increase.

Export demand offers additional support

International demand provided another source of momentum. Survey findings indicated that export orders grew at their fastest pace in six months.

Manufacturers reported stronger overseas demand, including orders from markets such as the United States, the United Kingdom, West Asia and Bangladesh. However, the improvement was not uniform across all sectors: growth in overseas demand for services weakened relative to the previous period.

Stronger export orders can support factory production, supply chains and business revenues. Their broader economic effect will depend on whether the momentum continues and how businesses respond to demand.

Hiring remains a concern

Despite the stronger business activity reading, employment growth was subdued.

The survey indicated that services-sector employment was unchanged in October, ending a nine-month period of hiring growth. Manufacturing hiring increased only marginally, suggesting that companies remained cautious about adding staff.

Businesses reported that existing teams were generally sufficient to handle current workloads. This may help explain why output improved faster than employment.

The divergence matters because stronger business activity does not automatically translate into a comparable increase in jobs. If demand remains firm for an extended period, companies may eventually need to expand their workforce, but the survey does not establish that this will happen.

Cost pressures ease

The survey also indicated that inflationary pressures facing businesses continued to moderate.

Input-cost inflation eased to its lowest level in almost a year, while increases in selling prices were the weakest since March 2025. Lower cost pressure may help companies manage expenses and protect margins, although the effect will differ across industries and businesses.

Business confidence for the year ahead improved to its highest level since May. Nevertheless, confidence remained below the average recorded during 2026, indicating that companies were not uniformly optimistic about the outlook.

What the findings mean for India’s economy

The October flash PMI offers an early indication that private-sector activity strengthened at the start of the month. Services demand, new orders and export business supported growth, while easing cost pressures provided a more favourable operating environment.

The weaker employment picture is an important counterpoint. Policymakers and businesses will need to watch whether stronger demand translates into sustained recruitment and broader income growth.

The findings are preliminary survey data, not an official measure of GDP growth. A single month’s reading cannot establish the long-term direction of the economy, and the final PMI figures may differ from the flash estimate.