India's manufacturing sector recorded the weakest performance in ten months this May, accelerating job losses as order books shrank, according to the IHS Markit Purchasing Managers' Index (PMI) which slid from 55.5 in April to 50.8 in May. A reading of 50 indicates no change on the Index.
“The Indian manufacturing sector is showing increasing signs of strain as the COVID-19 crisis intensifies," said Pollyanna De Lima, Economics associate director at IHS Markit, adding that all indices were down from April, including key gauges of current sales, production and input buying, reflecting the slowest growth rates in ten months.
"Amid a lack of new work, goods producers reduced headcounts again, with the rate of job shedding quickening in May," she said.
“Although the health of the Indian manufacturing sector continued to improve in May, the latest results showed a significant loss of growth momentum… There was also a substantial slowdown in growth of input purchasing and another round of job shedding,” the firm said in a statement on the PMI based on data collected between May 12 and 25.
“Manufacturers became increasingly concerned about the negative impacts of the pandemic on operations. Companies foresee output growth in the year ahead, but the overall level of positive sentiment dipped to a ten-month low,” it added.
This subdued optimism, Ms De Lima warned, could hamper business investment and cause further job losses, going forward.
Compared to the national lockdown last year, however, the detrimental impacts of the pandemic and associated restrictions on the manufacturing sector are ‘considerably less severe’, Ms De Lima said. While firms scaled up production volumes during May, 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,” the firm said.