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India Manufacturing PMI Slips to 54.7 in October; Growth Remains in Expansion Zone

Posted on 2nd Nov 2026 02:46 pm by rohit kumar

India's manufacturing sector continued to expand in October 2026, although the pace of growth moderated compared with the previous month. The HSBC India Manufacturing Purchasing Managers' Index (PMI) declined to 54.7 in October from 55.1 in September, reflecting slower increases in factory output and new orders.

 

The latest figures were released on Monday in a monthly survey compiled by S&P Global. Despite the decline, the manufacturing PMI remained comfortably above the neutral 50-point mark and its long-term average, indicating that India's factory activity continued to record strong expansion.

 

Stronger international demand provided support to manufacturers, with new export orders increasing at their fastest pace in six months. Meanwhile, easing input cost pressures offered some relief to businesses.

 

India Manufacturing PMI Falls to 54.7 in October

 

The seasonally adjusted HSBC India Manufacturing PMI slipped to 54.7 in October, compared with 55.1 in September. The latest reading was also slightly below the preliminary estimate of 54.9.

 

A PMI reading above 50 indicates expansion in business activity, while a figure below 50 signals contraction. Therefore, the October reading does not indicate a decline in manufacturing activity. Instead, it shows that the sector continued to grow, but at a slightly slower pace.

 

The survey found that new business continued to increase sharply, supported by favourable demand conditions, new client acquisitions and marketing initiatives. However, the pace of growth eased marginally from September's seven-month high.

 

Factory output also increased during October, although production growth moderated compared with the previous month.

 

Export Orders Reach a Six-Month High

 

One of the most positive developments in the October manufacturing PMI survey 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 momentum in domestic orders.

 

Companies reported stronger business from several international markets, including Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, the United Kingdom, the United States and the United Arab Emirates.

 

The improvement in export demand was supported by new client acquisitions, favourable market conditions and successful marketing campaigns.

 

According to Pranjul Bhandari, Chief India Economist at HSBC, strong international demand helped support manufacturing output, while companies increased their raw material inventories to prepare for potential supply disruptions and meet rising production requirements.

 

Manufacturers Increase Raw Material Inventories

 

Indian manufacturing companies continued to build up their inventories during October.

 

The accumulation of input inventories reached an eight-month high as manufacturers increased precautionary stocks to manage potential shortages and meet production requirements.

 

Companies also continued to increase their stocks of finished goods. The survey indicated that finished-goods inventories rose at a record pace, reflecting efforts to accommodate demand and prevent product shortages.

 

However, the pace of raw material purchasing slowed compared with previous months. Manufacturers remained cautious amid uncertainty in the global business environment.

 

Hiring Continues, but Employment Growth Slows

 

The manufacturing sector recorded an increase in employment for the second consecutive month in October.

 

Higher production requirements and rising workloads encouraged companies to add workers. However, the pace of hiring slowed compared with September.

 

The survey also indicated that employment trends were not uniform across all manufacturing categories, with some segments recording weaker hiring activity.

 

Although businesses continued to receive new orders, the slower pace of job creation suggested that manufacturers remained cautious about expanding their workforce.

 

Input Cost Inflation Eases, Business Confidence Weakens

 

Another important finding from the October PMI survey was the moderation in price pressures.

 

Input cost inflation declined to its lowest level since February, despite manufacturers reporting higher prices for certain raw materials and energy inputs.

 

The rate of increase in selling prices also weakened, reaching its lowest level in nearly four years. This suggests that manufacturers faced relatively moderate pressure to raise prices charged to customers.

 

However, business confidence weakened compared with September and remained below its long-term average.

 

Only around 18% of surveyed manufacturers expected production to increase over the next 12 months, while the remaining respondents maintained a neutral outlook.

 

Companies that expected stronger production cited new client enquiries and growing demand for industrial automation and technology solutions.

 

How Is India's Manufacturing PMI Calculated?

The HSBC India Manufacturing PMI is compiled by S&P Global using responses from purchasing managers at approximately 400 manufacturing companies.

 

The survey tracks changes in important business indicators, including new orders, factory output, employment, suppliers' delivery times and stocks of purchases.

 

A reading above 50 indicates that manufacturing activity has expanded compared with the previous month. A reading below 50 signals contraction.

 

What Does the October PMI Reading Mean for India's Economy?

 

The decline in India's manufacturing PMI to 54.7 indicates that factory-sector growth lost some momentum in October, but the overall picture remains positive.

 

Strong export demand, continued expansion in production and easing cost pressures supported manufacturing activity. However, slower domestic order growth, subdued hiring and weaker business confidence remain important factors to watch.

 

The latest survey suggests that India's manufacturing sector continues to expand, although the sustainability of this momentum will depend on domestic demand, export performance and the global economic environment.

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