Business & Economy News
India’s manufacturing sector continued to expand in October 2026, but the pace of growth moderated as factory output and new orders increased at a slower rate. The latest HSBC India Manufacturing Purchasing Managers’ Index (PMI) declined to 54.7 in October from 55.1 in September, indicating a modest slowdown in industrial activity.
The latest reading, released on November 2, remained comfortably above the important 50-point mark that separates expansion from contraction. This indicates that India’s manufacturing industry continues to experience growth, although momentum has weakened compared with the previous month.
The survey, compiled by S&P Global, also highlighted a positive development in international trade, with new export orders recording their fastest growth in six months. Meanwhile, easing input costs and lower selling price inflation provided some relief to manufacturers.
Manufacturing PMI Falls to 54.7 in October
The HSBC India Manufacturing PMI slipped to 54.7 in October compared with 55.1 in September. The reading was also slightly below the preliminary estimate of 54.9.
Although the decline indicates slower growth, it does not suggest that the manufacturing sector has entered contraction.
A PMI reading above 50 generally indicates that business activity is expanding, while a reading below 50 signals contraction.
The latest figures indicate that Indian manufacturers continued to receive new orders and increase production, but the pace of improvement was weaker than in September.
Growth in new domestic business eased marginally from September’s seven-month high, reflecting some moderation in demand conditions.
Despite this slowdown, manufacturers continued to report favourable demand trends, new customer acquisitions and successful marketing campaigns. <Cite refs={[“turn623907search3″,”turn623907search11”]}/>
Export Orders Reach a Six-Month High
One of the biggest positive developments in October was the improvement in international demand.
New export orders increased at their fastest pace in six months, helping Indian manufacturers maintain production growth despite softer domestic demand.
Companies reported stronger business opportunities across several international markets, including:
- United States
- United Kingdom
- United Arab Emirates
- Saudi Arabia
- Canada
- Bangladesh
- Indonesia
- Nepal
- Oman
- Sri Lanka
The improvement in export demand suggests that Indian manufacturers are continuing to find opportunities in international markets.
Strong overseas orders can support factory utilisation, production planning and business expansion. They may also help companies balance fluctuations in domestic consumption.
According to HSBC Chief India Economist Pranjul Bhandari, stronger international demand supported manufacturing output, while companies increased input inventories to prepare for potential supply disruptions and rising production requirements.
Factory Output Continues to Grow, but at a Slower Pace
Manufacturing production increased in October, although the rate of expansion moderated compared with September.
Higher sales, new product launches and improved customer demand continued to support factory operations.
However, slower growth among intermediate goods manufacturers affected the overall pace of production.
Despite the moderation, manufacturing output remained above its long-run average, indicating that the sector continues to demonstrate resilience.
The latest figures suggest that production activity remains healthy, but manufacturers may need stronger domestic demand and sustained export growth to maintain momentum in the coming months.
Inflation Pressure Eases for Manufacturers
Another encouraging development in October was the moderation in manufacturing cost pressures.
The overall rate of input cost inflation declined to its lowest level since February, even though some manufacturers continued to report higher prices for raw materials and energy.
The increase in selling prices also slowed significantly, reaching its weakest level in nearly four years.
This development could provide some relief to manufacturers dealing with production expenses, energy costs and competition in domestic and international markets.
Lower input cost inflation can help businesses protect profit margins, while slower selling price increases may benefit customers through more stable product prices.
However, the impact will vary across industries depending on their raw material requirements, pricing power and operating expenses.
Manufacturing Employment Rises, but Hiring Momentum Weakens
India’s manufacturing sector recorded an increase in employment for the second consecutive month in October.
Higher production requirements and growing workloads encouraged companies to recruit additional workers.
However, the pace of job creation remained modest and weakened compared with September.
The survey also indicated that capital goods manufacturers reduced their workforce during the month, highlighting differences in employment trends across manufacturing categories.
This suggests that while overall industrial activity continues to expand, businesses are adopting a cautious approach towards workforce expansion.
Employment growth will remain an important indicator of whether the current manufacturing recovery translates into broader job creation.
Manufacturers Increase Inventory to Avoid Supply Disruptions
Indian manufacturers continued to increase their inventories during October to prepare for higher production requirements and possible supply-chain disruptions.
Stocks of finished goods increased at the fastest pace recorded in the survey’s more than 21-year history.
Companies indicated that they were deliberately building finished-goods inventories to accommodate demand and avoid product shortages.
Input inventories also increased, with the pace of accumulation reaching an eight-month high.
However, the growth in raw material purchasing slowed to its weakest level during the 64-month period of continuous expansion in purchasing activity.
This combination suggests that manufacturers are managing their inventory levels carefully while preparing for uncertain future demand and potential supply interruptions.
Business Confidence Weakens Despite Strong Export Demand
Despite continued growth in manufacturing activity, business confidence declined in October.
The survey showed that manufacturers became less optimistic about production prospects over the next 12 months, with confidence remaining below its long-run average.
Approximately 18% of surveyed manufacturers expected their output to increase over the coming year, while the remaining respondents anticipated broadly unchanged production.
Optimism was supported by new customer enquiries and expected demand for industrial automation and technology solutions.
However, uncertainty surrounding domestic demand, global economic conditions and future business requirements appears to be influencing manufacturers’ expectations.
Weaker business confidence could affect decisions related to hiring, capital investment and production expansion if the trend continues.
What Does the October PMI Data Mean for India’s Economy?
Manufacturing is an important contributor to India’s economic growth, employment generation, exports and industrial development.
The October PMI figures present a mixed picture of the sector.
On the positive side, manufacturing activity remains firmly in expansion territory, export demand has strengthened and inflationary pressures have eased.
However, slower domestic order growth, weaker business confidence and subdued hiring indicate that manufacturers are approaching the next phase with some caution.
The performance of the manufacturing sector in the coming months will depend on several factors:
- Domestic consumption: Stronger consumer demand could encourage companies to increase production.
- International trade: Continued export growth could support manufacturing activity.
- Raw material costs: Stable input prices could help businesses manage production expenses.
- Employment generation: Stronger hiring would indicate greater confidence in future demand.
- Industrial investment: Spending on technology, automation and production capacity could improve long-term competitiveness.
India’s ability to maintain export momentum while strengthening domestic demand will be particularly important for sustaining industrial growth.
Key Takeaway for Businesses and Investors
The October manufacturing PMI indicates that India’s industrial sector continues to grow, although the pace has moderated.
The rise in export orders and easing cost pressures are encouraging developments, but weaker business confidence and slower domestic demand suggest that the manufacturing outlook remains mixed.
For businesses, the latest data highlights the importance of managing inventory, controlling costs and identifying new export opportunities.
For investors, manufacturing companies with strong order books, stable margins, efficient operations and diversified export markets may remain important to watch as the sector navigates changing economic conditions.
