India's Factory Hiring Slows in October Even as Output and Export Orders Grow

India's factory activity kept expanding in October but at a slightly slower pace, and hiring in the sector grew only marginally, according to the HSBC Flash India Manufacturing Purchasing Managers' Index released on Friday, October 23, 2026. The headline manufacturing index eased to 54.9 from 55.1 in September. A reading above 50 still signals growth, so the survey points to continued expansion rather than a contraction.

Output and new orders continued to expand at broadly unchanged rates compared with the previous month. The Manufacturing Output Index edged up to 57.6 from 57.5. HSBC's chief India economist said manufacturing output and new order growth stayed broadly stable, while the figures also pointed to a significant improvement in export demand.

Export demand picks up

New export orders increased at their fastest pace since June 2025, with firms reporting demand from markets including the United States, the United Kingdom, West Asia, Brazil and Europe. The wider private sector survey, which combines manufacturing and services, recorded its fastest rise in international orders in six months.

Faced with stronger orders, manufacturers raised their stocks of purchases at the fastest rate in eight months. Finished goods inventories rose at the sharpest pace on record. However, growth in purchasing activity eased to its slowest pace since the current expansion began in July 2021, suggesting firms were cautious about building too much capacity at once.

Hiring stays cautious

Manufacturing employment increased only slightly, as firms said they had sufficient staffing capacity to handle current workloads. The composite survey showed job creation across the private sector at its slowest pace so far this year. Services companies kept workforce levels unchanged, ending a nine month period of employment growth, while factories continued to add staff but at a reduced rate.

The slowdown in hiring matters for production planning and scheduling roles, which depend on matching staffing to order volumes. When backlogs fall, as they did for the third time in four months, factories can clear work with existing teams. The survey noted that unfinished business declined at the joint fastest pace in nearly six and a half years, and the latest fall was among the sharpest since the global financial crisis.

Price pressures ease

Inflationary pressures continued to ease in October. Input cost inflation slowed for the seventh straight month to its lowest level in almost a year, while selling price inflation moderated to its weakest pace since March 2025. Where input prices increased, firms mentioned higher steel and transportation costs.

Business confidence for the coming year strengthened to its highest level since May, supported by expectations of further improvements in market conditions. Still, the composite reading of 56.7 remained below the average recorded so far in 2026, and the year ago reading was 60.4, indicating that momentum has cooled from a stronger base.

For workers, the survey suggests that demand for factory labor is holding but not accelerating. Companies appear to be absorbing higher orders with current crews and larger inventories rather than new recruitment. The next monthly readings will show whether export demand translates into broader hiring or whether firms continue to rely on existing staffing and stock building to meet orders.