New Delhi : With second wave of COVID-19 at its peak in May, the Indian manufacturing sector witnessed its slowest growth in ten months, according to a report released on Tuesday by IHS Markit.
At 50.8 in May, down from 55.5 in April, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) moved closer to the no-change mark of 50.0, the survey report said. This indicates weakest growth in the current ten-month sequence of expansion.
Commenting on the survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said: “The Indian manufacturing sector is showing increasing signs of strain as the COVID-19 crisis intensifies. Key gauges of current sales, production and input buying weakened noticeably in May and pointed to the slowest rates of increase in ten months. In fact, all indices were down from April. Amid a lack of new work, goods producers reduced headcounts again, with the rate of job shedding quickening in May.”
Due to the intensification of the COVID-19 crisis and its detrimental impact on demand, companies observed the slowest rises in new work and output for ten months, the release said. There was also a substantial slowdown in growth of input purchasing and another round of job shedding. Concerns surrounding the pandemic restricted business confidence towards the year-ahead outlook for production, it added.
Data showed new orders increased at a marginal pace that was the slowest since the current stretch of expansion started in August 2020. According to panel members, demand was suppressed by the COVID-19 crisis.
According to survey report firms scaled up production volumes during May, but the pace of expansion was modest in the context of historical data. In fact, the rise was the weakest in the current ten-month period of growth. Anecdotal evidence indicated that the upturn was curbed by the escalation of the pandemic and difficulties in securing raw materials.
New export orders also increased at a softer rate. COVID-19 restrictions and a lack of new work led companies to reduce their payroll numbers further. The decline in employment was slight, but accelerated from April.