India's Business Growth Reaches Four-Month High in October as Employment Stalls

India's business activity expanded at its fastest pace in four months in October, supported by stronger orders and a services-led pickup. Despite the acceleration in output, hiring almost stalled as companies chose to meet rising workloads with their existing staff, according to a preliminary survey.

The HSBC flash India Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 56.7 in October from September's final reading of 55.9. This figure came in above the Reuters poll median forecast of 56.1. While the index remains above the 50-mark that separates growth from contraction, indicating healthy expansion, it still sits below this year's average.

The services sector played a major role in driving this acceleration. The services PMI rose to 56.2 from 55.2 in September. Although demand strengthened within the sector, employment remained unchanged, effectively ending a nine-month hiring streak.

Meanwhile, manufacturing output edged slightly higher, although slower recruitment pulled the sector's headline PMI down to 54.9 from 55.1. Businesses reported that current staffing levels were sufficient to handle existing workloads, with overall backlogs falling at the joint-fastest pace recorded in nearly six-and-a-half years.

International demand provided additional support for the economy. Overall export orders expanded at their fastest pace in six months, although this improvement was primarily concentrated among goods producers, as growth in foreign requests for services weakened.

On the pricing front, businesses experienced some relief across both sectors. Input-cost inflation eased to its lowest level in almost a year, and selling-price increases reached their weakest point since March of the previous year. Alongside these moderating price pressures, overall business confidence recovered to its highest level since May, though it remained below the average for the year.

"The October PMI data highlights a resilient Indian market driven by steady demand and easing cost pressures. However, the pause in hiring indicates that businesses are prioritizing operational efficiency and utilizing current capacity before expanding their workforce. Entrepreneurs and business leaders should monitor these demand trends closely while maintaining a balanced approach to capacity management and cost control." — Dr. Shishir Gupta, Founder & CEO, StartupLanes