India's manufacturing PMI eased to 54.7 in October 2026 from 55.1 in September, signaling a slight deceleration in the rate of factory activity. But the index stayed above the 50-point level, indicating further growth in manufacturing.

Key Highlights

• India's manufacturing PMI fell to 54.7 in October from 55.1 in September, but continued to stay above the expansion mark of 50.
• New export orders hit a six-month high and inflation in input costs was at its lowest level since February.

According to the HSBC India Manufacturing Purchasing Managers’ Index (PMI) survey, stronger international demand supported industrial activity, with new export orders recording their fastest growth in six months. Meanwhile, easing input cost inflation provided some relief to manufacturers, although business confidence weakened during the month.

India’s Manufacturing PMI Shows Continued Growth in New Orders and Exports

New business orders continued to increase sharply in October, supported by favourable demand conditions, new client acquisitions and successful marketing initiatives. However, the pace of growth moderated slightly from September's seven-month high.

Export demand remained a key growth driver, with new export orders expanding at their fastest rate in six months. Indian manufacturers reported stronger sales across several international markets, including the US, UK, Canada, Bangladesh, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka and the UAE.

Higher sales and new product launches also supported a strong increase in manufacturing output. However, production growth moderated slightly compared with September, with intermediate goods producers continuing to lead the sector's expansion.

Manufacturing Input Cost Inflation Eases to Lowest Level Since February

Cost pressures across India's manufacturing sector eased in October, with input price inflation declining to its lowest level since February. Although manufacturers reported higher prices for certain raw materials and energy, the overall increase in input costs remained relatively subdued.

Manufacturers continued to raise selling prices to protect profit margins. However, the pace of output price inflation remained marginal and recorded its weakest increase in nearly four years.

Manufacturing Sector Hiring and Inventory Levels Increase

Indian manufacturers increased their workforce for the second consecutive month in October, supported by higher production requirements and growing workloads. However, employment growth remained modest and slowed compared with September. While capital goods producers reported workforce reductions, other manufacturing segments recorded additional hiring.

Outstanding business volumes increased for the seventh consecutive month, but the rate of growth was still very small.

Manufacturers continued to also stockpile inventory to cater for future demand and to reduce potential supply disruptions. Finished goods inventories rose at the fastest rate since the survey started and input stocks grew at their highest level in 8 months.

Additionally, input purchasing increased for the 64th consecutive month, although its pace of expansion was the weakest during this period.

Also Read: India's Manufacturing PMI Climbs to 55.1 In Sept, Highest in 7 Months

Business Confidence Weakens Despite Manufacturing Expansion

Despite continued growth in new orders and production, manufacturers reported lower optimism about the business outlook in October. Business confidence fell in September and was lower than its long-term average.

Approximately 18% of the manufacturers surveyed anticipate growth in their production in the next 12 months and 42% have a neutral stance.

Businesses expected more enquiries from clients and growing demand for industrial automation and technology solutions were among the key reasons for increased production.

HSBC Economist Highlights Strong Export Demand

Pranjul Bhandari, HSBC's Chief India Economist, said the October manufacturing PMI eased back from September's level of 55.1, but stayed well in positive growth mode and above the long-term trend.

She emphasized that new export orders surged to a six-month high, contributing to a strong growth in manufacturing activity, due to a pick-up in foreign demand.

Bhandari also said that members of industry have expanded their stocks of inputs the most in eight months, reflecting precautionary stockpiling in response to potential supply constraints facing the industry in the uncertain global environment.

There was some easing of input and output price pressures overall, although some material and material cost pressures rose in the month.