A complete nationwide lockdown for over a month, which forced majority of businesses to shut their activities, pushed the manufacturing sector to an unprecedented contraction in the month of April.
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell to 27.4 in April, from 51.8 in March, according to data released on Monday.
The drop seen in the manufacturing PMI reflected the sharpest deterioration in business conditions across the sector since data collection began over 15 years ago. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction, the IHS Markit said in its release.
“In an environment of severely reduced demand, new orders fell for the first time in two-and-a-half years and at the sharpest rate in the survey’s history, far outpacing that seen during the global financial crisis,” the release said.
On the employment front, deteriorating demand conditions saw manufacturers drastically cut back staff numbers in April. The reduction in employment was the quickest in the survey’s history.
“In the latest survey period, record contractions in output, new orders and employment pointed to a severe deterioration in demand conditions. Meanwhile, there was evidence of unprecedented supply-side disruption, with input delivery times lengthening to the greatest extent since data collection began in March 2005,” Eliot Kerr, Economist at IHS Markit.
Future outlook, though muted, witnessed an uptick compared to the predecessor month. Sentiment regarding the 12-month outlook for production ticked up from March’s recent low on hopes that demand will rebound once the COVID-19 threat has diminished and lockdown restrictions eased.
“There was a hint of positivity when looking at firms’ 12-month outlooks, with sentiment towards future activity rebounding from March’s record low. That said, the degree of optimism remained well below the historical average,” Kerr said.
In India, the death toll due to COVID-19 rose to 1,373 and the number of cases climbed to 42,533 as on Monday, according to the health ministry. Meanwhile, the coronavirus-induced lockdown has been extended beyond May 4, for another two weeks in the country.