India's economic activity accelerated in September 2026, driven by a manufacturing rebound and robust auto sales. While major indicators like the PMI reflect strong industrial growth, the labor market remains selective and credit card spending has cooled, pointing to a mixed consumption landscape.
India’s economic growth showed a clear acceleration in September 2026, led by strong gains in the manufacturing and automotive sectors. The HSBC India Manufacturing Purchasing Managers' Index (PMI) climbed to 55.1, up from 52.8 in August, marking a seven-month high. This improvement suggests that factories and businesses are operating with higher efficiency, supported by both strong domestic and export orders. The broader Moneycontrol Advance Business Index also rose to 102.8, confirming that activity is trending above long-term averages.
Manufacturing And Auto Lead The Charge
Industrial activity saw a broad recovery, with coal production growth moving to 9.2 percent, reversing the contraction observed in August. This helped boost the overall industrial outlook. The automotive sector was a standout performer, with passenger vehicle retail sales recording strong double-digit year-on-year growth. Major companies like Maruti Suzuki, Mahindra, and Tata Motors benefited from this uptick, which was further supported by early festive season demand. Additionally, tractor sales saw a 14.4 percent rise, providing a positive signal for rural demand, which has been a key monitorable for the economy.
Mixed Signals In Labor And Consumption
While manufacturing output is showing strength, the employment situation remains uneven. The Naukri JobSpeak Index showed only a 2 percent growth compared to the previous year, indicating that companies are hiring selectively. While sectors like AI/ML are seeing a 20 percent jump in hiring demand, industries such as IT, education, and hospitality are experiencing declines. This suggests that while jobs are being created, they are concentrated in specific high-growth areas rather than across the entire workforce.
Consumption patterns are also showing two distinct sides. Digital payments remain a reliable driver of economic activity, but there is a clear dip in discretionary spending. Credit card usage contracted by 3.1 percent in September, suggesting that consumers might be becoming more cautious with credit-fueled expenses. Furthermore, while export demand is currently holding up, the growth rate for new export business in the services sector has slowed to its lowest point in nearly three years. Moving forward, investors will likely track whether this manufacturing-led momentum can remain steady if consumption patterns continue to shift or if hiring remains confined to just a few sectors.