Factory Activity Eases Slightly In October But Export Orders Hit Six-Month High

India's manufacturing sector stayed firmly in expansion in October, even as the headline survey reading eased marginally from the previous month. The HSBC India Manufacturing Purchasing Managers' Index came in at 54.7, down slightly from 55.1 in September but comfortably above the 50 mark that separates growth from contraction, and above its long-run average.

The standout in the survey was external demand. New export orders expanded at their fastest rate in six months, supported by stronger buying from a broad range of overseas markets. Overall new orders continued to rise sharply, and output grew at a solid pace led by makers of intermediate goods, even if momentum cooled a touch from September's multi-month high.

Prices and hiring

On costs, the survey offered encouraging news. Input-cost inflation eased to its lowest since February, and the pace at which firms raised their own selling prices slowed to its weakest in nearly four years, a sign that pricing pressures in the goods economy remain contained. Manufacturers continued to add jobs and build inventories, with stocks of finished goods rising at a record pace, though the pace of hiring stayed modest and business confidence slipped below its long-run average.

What it means

A reading in the mid-50s indicates healthy, broad-based expansion rather than a sprint, and the six-month high in export orders is particularly notable at a time when global trade has been uneven and questions linger over tariff arrangements with major partners. Strong external demand helps diversify the drivers of factory growth beyond the domestic festive bump.

The softening in price pressures is also significant. Benign input and output inflation gives policymakers more comfort on the inflation outlook, and supports the view that the goods economy is not generating fresh price risks. The one note of caution is the dip in business confidence, which suggests firms remain watchful about the durability of demand. Taken together with buoyant tax and consumption data, though, the survey rounds out a picture of an economy carrying solid industrial momentum into the festive peak.