Indian companies continue to cut staff at fastest pace in May

Source: Xinhua | 2020-06-02

Indian companies reduced staff at the quickest pace in May as per the Purchasing Managers Index (PMI) survey released Monday reporting a second consecutive month of decline, but marginally up following April's record decline.

The rate of workforce contraction accelerated to the fastest in the survey's history, eclipsing the previous record set in April, according to a statement by IHS Markit, a London-based global information provider that compiles the PMI survey.

The weak demand due to the COVID-19-led disruption ensured lower production, forcing domestic manufacturers to reduce workers during the month under review, said the statemen.

"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," said Eliot Kerr, an economist at IHS Markit.

The seasonally adjusted PMI index in May rose marginally to 30.8 from 27.4 in April, but lower than 52.7 in May last year. A figure of above 50 indicates expansion, while a sub-50 print signals contraction.

Faced with a further deterioration in demand conditions, companies continue to cut back production midway through the second quarter, but the severe reduction was slower than April's unprecedented decline, the statement said.

Raw-material prices continued to fall, as suppliers cut prices in an attempt to secure orders. The benefit of lower cost was passed on to the customers.

Indian manufacturers remained optimistic towards the one-year business outlook, anticipating a return of growth once all coronavirus-related restrictions are relaxed. The degree of positivity eased slightly from April and remained historically subdued, the statement said.

Asia's third largest economy had been under a nationwide lock down for the past two months that is now being extended by one more month in containment zones and some red zones of metro cities till June 30.