- Wednesday, April 24, 2024
By: Shubham Ghosh
INDIA’S manufacturing sector activities shrunk for the first time in 11 months in June since the rise of coronavirus cases and strict lockdown measures disrupted demand and resulted in loss of jobs, a survey said on Thursday (1).
The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell to 48.1 in June as compared to 50.8 in May. The PMI is compiled by IHS Market based on responses from purchasing managers in a panel of around 400 manufacturers. The responses for the June index were collected between June 11 and 24.
The index fell below the critical 50 mark for the first time since July last year. As per the index, above 50 means expansion while below the same means contraction.
The index fell below the critical 50.0 mark for the first time since July 2020. In PMI parlance, a print above 50 means expansion while a score below 50 denotes contraction.
The fall meant renewed contraction in factory orders, production, exports and quantities of purchase. The survey also said that with business optimism taking a hit over the month that just ended, job-shedding continued.
Pandemic restrictions hit international demand
The pandemic-time restrictions also hurt the international demand for Indian goods resulting in a reduction in export orders for the first time in 10 months.
“The intensification of the COVID-19 crisis in India had a detrimental impact on the manufacturing economy. Growth of new orders, production, exports and input purchasing was interrupted in June as containment measures aimed at bringing the pandemic under control restrained demand,” Pollyanna De Lima, economics associate director at IHS Markit, said.
Lima added that rates of contraction in all cases were softer than that seen during the first lockdown.
She said business confidence was low in June owing to uncertainty over when the pandemic can be controlled. Companies were least optimistic for almost a year. Because of the “subdued optimism”, June saw shedding of jobs, she added.
Input costs went up further in June with firms reporting higher prices for chemicals, electronic components, energy, metals, etc. It was left for the clients to bear the additional burdens of cost, with the goods producers raising their fees for the tenth straight month, the survey said.
