India’s Manufacturing PMI Drops To 10-Month Low In May
A gauge of activity across India’s manufacturing sector fell to the lowest in 10 months amid a resurgence of Covid-19 cases.
The IHS Markit India Manufacturing Purchasing Managers’ Index stood at 50.8 in May 2021 compared with 55.5 in April, according to a media statement. A reading above 50 indicates economic expansion.
The Indian manufacturing sector is showing increasing signs of strain as the Covid-19 crisis intensifies. Key gauges of current sales, production and input buying weakened noticeably in May and pointed to the slowest rates of increase in 10 months. In fact, all indices were down from April.Pollyanna De Lima, Economics Associate Director at IHS Markit
New orders, the largest sub-component of the headline figure, rose at the slowest pace since the current stretch of expansion started in August 2020, the release said, with demand suppressed by the second wave of the Covid-19 crisis.
Overall buying levels also rose at the slowest pace in 10 months. Companies that were successful in securing new work, purchased additional materials even as others refrained from lifting input buying due to fewer output needs and the ongoing crisis.
Supplier delivery times continued to lengthen for the third straight month. The deterioration was linked to global shortages of raw materials and the pandemic. In turn, raw material scarcity exerted further upward pressure on input costs. The rate of inflation eased to a four-month low, but remained sharp and above its long-run average.
Survey respondents reported higher aluminium, chemical, copper, plastic and steel prices. Amid reports of ongoing efforts to protect margins from cost increases, firms lifted their selling prices again in May. The rate of charge inflation was solid, but softened from April. On the stocks front, there was a solid contraction in post-production inventories.
New export orders also increased at a softer rate.
Covid-19 restrictions and a lack of new work led companies to reduce their payroll numbers further. The decline in employment was slight, but accelerated from April.
Growth projections were revised lower as firms became more worried about the escalation of the pandemic and local restrictions, Lima said. The overall degree of optimism towards the year-ahead outlook for output was at a 10-month low, a factor which could hamper business investment and cause further job losses, she said.