The slump in India's factory activity continued in May as coronavirus lockdown negatively impacted demand, a survey showed. The fresh orders with producers continued to decline after April's record contraction, leading companies to cut jobs at the quickest pace on record, the manufacturing Purchasing Manager's Index (PMI) released by IHS Markit also showed. The manufacturing PMI, however, marginally increased from 27.4 in April to 30.8 in May amid partial easing of lockdown restrictions. The factory activity still remained under 50. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
"In a sign of further demand weakness, new orders placed with goods producers continued to fall after April's record contraction. The rate of decline decelerated but was still the second-fastest since the series' inception in March 2005," IHS Markit said.
"Anecdotal evidence suggested that global measures to stem the spread of COVID-19 continued to stifle exports," it added. In April, the index had slipped into contraction mode, after remaining in the growth territory for 32 consecutive months.
The sub-indices tracking new orders and output remained firmly in contraction territory. It led to factories to lower headcount at the sharpest rate since the survey began in March 2005.
"The further reduction in May highlights the challenges that businesses might face in the recovery from this crisis, with demand remaining subdued while the longevity of the pandemic remains uncertain," the survey added.
Meanwhile, India's gross domestic product (GDP) grew at 3.1 per cent in the final quarter of financial year 2019-20, lowest in 44 quarters. Overall growth for FY20 slumped to 4.2 per cent - lowest since FY09 when GDP was 3.09 per cent - compared to 6.1 percent in FY19.
Copyright©2021 Living Media India Limited. For reprint rights: Syndications Today