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BENGALURU, Nov 3 (Reuters) - India's manufacturing activity gained momentum in October as domestic demand strengthened, offsetting a slowdown in export growth, although business optimism slipped from a seven-month high, a business survey showed on Monday. The HSBC India Manufacturing Purchasing Managers' Index, compiled by S&P Global, rose to 59.2 in October from 57.7 in September, higher than a preliminary estimate of 58.4. Sign up here. The 50.0 mark separates expansion from contraction on a monthly basis. Output growth accelerated to match the joint-strongest pace in five years, equal to that seen in August. Manufacturers cited demand strength, efficiency improvements, new clients and technology investments as factors driving higher production. But international sales growth weakened. New export orders increased at their slowest rate in 10 months, though the rise remained substantial. Despite input cost inflation easing to an eight-month low, output charge inflation remained at its highest level in nearly 12 years for the second consecutive month. Companies reported passing on higher freight and labour costs to customers, while strong demand allowed them to maintain elevated prices. "Robust end-demand fuelled expansions in output, new orders, and job creation. Meanwhile, input prices moderated in October while average selling prices increased as some manufacturers passed on additional cost burdens to end-consumers," said Pranjul Bhandari, chief India economist at HSBC. Employment rose for the 20th straight month as firms hired to handle increased workloads but the pace of job creation remained moderate and similar to September's level. The future output sub-index gauging business optimism slipped from its seven-month high in September but stayed robust. "Looking ahead, future business sentiment is strong due to positive expectations around GST (goods and services tax) reform and healthy demand." added Bhandari. Reporting by Shaloo Shrivastava; Editing by Kim Coghill
