India's manufacturing sector sustained a strong expansion in October 2026, with the seasonally adjusted HSBC India Manufacturing Purchasing Managers' Index (PMI) clocking 54.7, comfortably above the neutral mark of 50.0, according to data compiled by S&P Global. While the headline reading eased marginally from 55.1 in September, it remained above its long-run average and well within expansionary territory.

Export orders emerged as a standout driver, with growth in new export sales reaching a six-month high — a signal that Indian manufacturers are capturing demand across a broad range of global markets even as domestic momentum softened slightly.

Key Developments in October Data

New business growth eased only marginally from September's seven-month high, remaining strong by historical standards. Manufacturers cited favourable demand trends, new client wins, and successful marketing campaigns as key contributors to the upturn in orders.

Output rose at a sharp rate that exceeded its long-run average, supported by rising sales and new product releases. Firms also expanded input inventories at the greatest pace in eight months, building precautionary buffers to guard against potential supply disruptions and to meet rising production requirements in a volatile global environment.

Export Markets Drive Momentum

Overseas demand provided a significant boost, with new export orders growing at the fastest pace since April 2026. Indian manufacturers reported gains from a broad range of destinations, including Bangladesh, Canada, Indonesia, Nepal, Oman, Saudi Arabia, Sri Lanka, the UK, the US, and the UAE. The geographic breadth of export growth suggests structural demand rather than concentration in a single trade corridor.

Jobs and Prices: A Mixed Picture

Hiring continued for another month, though the pace of job additions was subdued. Input and output price pressures eased slightly compared to September, even as some material and energy costs ticked higher. Overall, inflationary pressure within the sector remained contained.

Business confidence, however, weakened during the month — a detail that warrants watching, as sentiment often leads activity by one to two quarters.

What Economists Are Saying

Pranjul Bhandari, Chief India Economist at HSBC, noted that the PMI 'softened to 54.7 in October from 55.1 in the previous month but remained firmly in expansionary territory and above its long-run average.' She added that 'strong international demand pushed growth of new export orders to a six-month high, supporting a robust rise in output.'

Bhandari also highlighted that producers increased input inventories to the greatest extent in eight months, citing precautionary stocking amid a volatile global environment, while overall price pressures eased slightly.

What to Watch Next

With business confidence dipping even as orders held firm, the November PMI reading will be closely tracked to assess whether the softening in sentiment translates into an activity slowdown. The trajectory of global demand — particularly from the US and UK, India's key export destinations — and domestic input cost trends will be critical variables heading into the final quarter of the year.