New Delhi: India’s business activity accelerated to a four-month high in October, driven by a sharp pickup in the services sector, even as hiring growth nearly ground to a halt, according to HSBC’s flash Purchasing Managers’ Index released by S&P Global on October 23.
The flash India Composite PMI rose to 56.7 in October from 55.9 in September, coming in above the Reuters poll forecast of 56.1. A reading above 50 separates expansion from contraction, and October’s figure points to the fastest pace of growth in four months, signalling that the economy has regained momentum after a softer phase.
The acceleration was powered by services. The Services PMI climbed to 56.2 from 55.2, signalling a strong rebound in demand across the sector. Manufacturing, by contrast, lost a touch of momentum, with the PMI slipping to 54.9 from 55.1 — still firmly in expansion territory, but no longer the engine of growth. The divergence suggests that domestic consumption of services is leading the current upswing.
The labour market, however, painted a sobering picture. Employment growth nearly stalled, with firms reporting that existing staff could comfortably handle current workloads. Reflecting that, backlogs of work fell at the joint-fastest pace in nearly six-and-a-half years — a sign that companies are working through pending orders rather than adding headcount.
The stall in hiring raises an important question about the quality of the recovery. Strong business activity without corresponding job creation points to a productivity-led expansion, where firms meet rising demand by getting more out of their existing workforce rather than expanding payrolls.
Export performance was a bright spot. Total export orders expanded at the fastest pace in six months, indicating that foreign demand for Indian goods and services is holding up despite global uncertainty. The export strength adds resilience to the growth story, reducing the dependence on domestic demand alone.
On the inflation front, the data offered relief. Input-price inflation eased to its lowest level in almost a year, while output-price growth slowed to the weakest since March last year, suggesting price pressures are moderating across the economy. Easing cost pressures give businesses room to protect margins without passing higher prices on to consumers.
Taken together, the October flash numbers tell a two-speed story: robust business growth led by services and exports, but a cautious approach to hiring that could temper the broader optimism. The final PMI figures, due early next month, will confirm whether this momentum held through the end of the month.
