India Business Growth Hits 4-Month High in October, Hiring Stalls

India's private sector picked up speed in October, but its hiring did not. Business activity expanded at the fastest pace in four months as stronger orders drove a services led pickup, a preliminary survey showed on Friday. The catch is that companies handled the extra work with the staff they already have, and employment was unchanged on the month.

HSBC's flash India Composite Purchasing Managers' Index, compiled by S&P Global, rose to 56.7 in October from September's final reading of 55.9. The result beat the median forecast of 56.1 in a Reuters poll. Any reading above 50 means activity is growing. The October figure is the strongest since June, although it remains below this year's average.

Services did the heavy lifting

The services PMI rose to 56.2 from 55.2 and drove most of the acceleration in output. Demand strengthened at home, and new orders grew. Manufacturing told a mixed story. Factory output edged higher and new export orders for goods rose at the fastest pace since June 2025, but slower recruitment pulled the headline manufacturing PMI down to 54.9 from 55.1.

Pranjul Bhandari, chief India economist at HSBC, said manufacturers responded to stronger demand by building inventories of both raw materials and finished goods, while cost pressures kept easing. Across both sectors, input cost inflation fell to its lowest in almost a year, and the rise in selling prices was the weakest since March last year. For a central bank watching inflation, that combination is welcome: growth is holding up and price pressure is fading.

The hiring stall

Employment is the soft spot in the report. Overall hiring was unchanged in October, ending a nine month run of job growth. Services companies stopped adding staff on a net basis after nine straight months of expansion. Manufacturers kept hiring, but only slightly. Companies told the survey that existing staffing was enough to handle current workloads, and backlogs of work fell at the joint fastest pace in nearly six and a half years, which points to spare capacity rather than strain.

Foreign demand helped. Overall export orders expanded at the fastest pace in six months. The improvement sat mostly with goods producers, since growth in foreign requests for services weakened. That split matters for India, where services exports are a large source of foreign earnings.

Why it matters

The flash reading gives policymakers an early look at the economy heading into the final quarter of the year. A composite score of 56.7 says the expansion is solid, not spectacular. The softer price data gives the Reserve Bank of India room to stay patient. The flat jobs number is the part that will worry officials most, since India's economy needs to absorb a large number of young workers every year. One month of flat hiring is not a trend, but if firms keep meeting orders without adding staff, the November and December surveys will get close attention.

What happens next

The final PMI readings for October will confirm or revise the flash numbers in early November. Economists will watch whether services hiring resumes and whether export orders for services recover. For now, the picture is a growing economy with cooling prices and a pause, not a collapse, in job creation.

Key numbers

• Flash composite PMI: 56.7 in October, up from 55.9 in September
• Services PMI: 56.2, up from 55.2
• Manufacturing PMI: 54.9, down from 55.1
• Employment: unchanged, ending a nine month hiring streak
• Export orders: fastest growth in six months
• Input cost inflation: lowest in almost a year