India's manufacturing PMI contracts sharpest in April to a 15-year low

Source: Xinhua | 2020-05-05

With over five weeks of nationwide lockdown to counter COVID-19, India's manufacturing activity contracted at its sharpest pace in April plunging to 27.4 from 51.8 in the preceding month of March, led by decline in demand and substantial supply chain disruptions.

The index was the lowest since the survey began 15-years ago in March 2005, a statement by IHS Markit, a London-based global information provider that compiles the index.

"After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April," said Eliot Kerr, economist at IHS Markit.

"Record contractions in output, new orders and employment pointed to a severe deterioration in demand conditions," Kerr said.

During the month under review, deteriorating demand conditions saw manufacturers drastically cut back staff numbers, which was the quickest in the survey's history, the statement said.

A similar trend was also seen in purchasing activity, with firms cutting input buying at a record pace.

Decline in prices triggered by demand has resulted in a sharp decline in inflation in Asia's third largest economy that could see India's Central Bank to ease policy rates further.

After ending its 5-week lock-down on Sunday, India has now divided itself into three zones of which 130 districts are designated as Red Zone, 284 as Orange Zone and 319 as Green Zone. The lock down has been extended by two more weeks in Red and Orange Zone while norms have been relaxed in the Green zone.

As per the official update on Monday afternoon, India has recorded 42,533 COVID-19 cases with 1,373 deaths so far.