India’s manufacturing industry fell back into decline during June, as the intensification of the pandemic and strict containment measures negatively impacted demand. The latest results highlighted renewed contractions in factory orders, production, exports and quantities of purchases. With business optimism fading over the month, job shedding continued.
Registering 48.1 in June as against 50.8 in May, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers Index was below the critical no-change mark of 50.0 for the first time since July 2020. The latest reading pointed to a renewed deterioration in the health of the sector that was, however, moderate. The PMI averaged 51.5 in the opening quarter of fiscal year 2021/22, the lowest three-month figure since the same period one year ago.
The stretch of new order growth that started in August 2020 came to an end in June, with firms linking the deterioration in demand to the pandemic. Despite being solid, the pace of contraction was much softer than those registered at the onset of COVID-19 last year. COVID-19 restrictions also curtailed international demand for Indian goods. New export orders decreased for the first time in ten months, albeit modestly. Falling new orders, business closures and the COVID-19 crisis triggered a reduction in output among Indian manufacturers. The decline was moderate relative to those seen in the first half of 2020, but ended a ten-month sequence of growth.
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