India Manufacturing PMI Falls to 54.7 in October; Export Orders Hit Six-Month High

India’s Manufacturing PMI Slips to 54.7 in October; Factory Activity Remains Strong

India’s manufacturing sector continued to expand in October 2026, although the pace of growth moderated slightly, according to the latest HSBC India Manufacturing Purchasing Managers’ Index (PMI) compiled by S&P Global.

The seasonally adjusted manufacturing PMI declined to 54.7 in October from 55.1 in September, remaining comfortably above the neutral mark of 50. A reading above 50 indicates expansion in manufacturing activity, while a reading below 50 signals contraction.

Growth in output and new orders continued, although both increased at softer rates than in the previous month. New business growth remained strong, supported by favourable demand trends, new client wins and successful marketing campaigns.

Export demand provided additional support, with new export orders increasing at the fastest pace in six months. Manufacturers reported stronger demand from several international markets, including Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, the UK, the US and the UAE.

Production increased at a sharp pace, although growth moderated from September’s seven-month high. Intermediate goods manufacturers continued to lead the expansion, while growth among other manufacturing segments remained positive.

Input Cost Inflation Eases; Factory Employment and Inventories Increase

One of the key positives in the October survey was the moderation in cost pressures. Overall input cost inflation eased to its lowest level since February 2026, despite manufacturers reporting higher prices for several materials and energy.

Selling price inflation also moderated significantly, with the increase in factory-gate prices becoming the weakest in just under four years. Manufacturers raised selling prices slightly to protect profit margins, but the pace of increase remained subdued.

Employment in the manufacturing sector increased for the second consecutive month as higher production requirements and rising workloads encouraged companies to hire additional workers. However, the pace of job creation remained slight. Capital goods manufacturers reduced staffing, while employment growth was recorded elsewhere.

Manufacturers also continued building inventories. Input inventories increased at their fastest pace in eight months, while finished goods stocks rose at an unprecedented rate as companies prepared for expected demand and sought to prevent potential supply shortages.

Outstanding business volumes increased for the seventh consecutive month, although the pace of accumulation remained marginal. Meanwhile, business confidence weakened compared with September and stayed below its long-run average. Close to 18% of manufacturers expected production to increase over the coming year, while the remaining respondents were largely neutral.

HSBC Chief India Economist Pranjul Bhandari said manufacturing activity remained firmly in expansion territory despite the moderation in the headline PMI. Strong international demand supported new export orders, while easing input and output price pressures provided some relief to manufacturers.

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Abhishek Sharma

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