New Delhi: The manufacturing industry in India saw a significant loss of growth momentum in May due to the intensification of the COVID-19 crisis and its detrimental effect on demand, a monthly survey said Tuesday.
The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell to 50.8 in May, from 55.5 in April, as companies saw the slowest increase in new jobs and production in ten months amid the intensification of the Covid-19 crisis.
In PMI language usage, a pressure above 50 means expansion, while a score below 50 indicates contraction. ‘The Indian manufacturing sector is showing increasing signs of tension as the COVID-19 crisis intensified. The key metrics of current sales, production and input purchases weakened markedly in May, pointing to the slowest rise in ten months. In fact, all indices were lower from April, ”said Pollyanna De Lima, director of economics at IHS Markit.
However, Lima noted that the adverse effects of the pandemic and associated constraints in the manufacturing sector are significantly less severe than during the first closure when unprecedented contractions were recorded.
“Growth projections were revised lower, as companies became more concerned about the increase in the pandemic and local constraints. The overall degree of optimism regarding the year-ahead forecast for production was at a low of ten months, a factor that could hamper business investment and cause further job losses, ‘Lima said. The survey has curbed growth in the manufacturing sector through the escalation of the pandemic and raw material security problems.
The survey said the concerns surrounding the pandemic had limited the company’s confidence in the year’s outlook for production. “Amid a shortage of new jobs, goods producers have reduced the number of people again, and the rate of job losses has increased in May,” Lima said.
On the marco-economic front, the Indian economy shrank by less than expected 7.3 percent in the financial year ended March 2021, after the growth rate increased in the fourth quarter, just before the world’s worst outbreak of coronavirus infections hit the country.
The next bi-monthly monetary policy review of the Reserve Bank of India (RBI) is announced on 4 June. Experts believe that the economic outlook will remain uncertain in light of the ongoing pandemic, that RBI’s monetary policy position is likely to remain accommodative.
Source: Telangana Today