Business EconomPosted at: Jul 1 2021 12:37PM Manufacturing sector fell back into decline in June: Report
New Delhi, Jul 1 (UNI) Strict containment measures to combat COVID-19 pandemic pushed India's manufacturing sector into a negative zone in June, as per IHS Markit survey report.
Due to renewed contraction in factory orders, production, exports and quantities of purchase for the first time in 11 months manufacturing activities declined month-on-month basis. "Registering 48.1 in June (against 50.8 in May), the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index (PMI) was below the critical no-change mark of 50.0 for the first time since July 2020," the report released on Thursday said.
Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said, “The intensification of the COVID-19 crisis in India had a detrimental impact on the manufacturing economy. Growth of new orders, production, exports and input purchasing was interrupted in June as containment measures aimed at bringing the pandemic under control restrained demand. In all cases, however, rates of contraction were softer than during the first lock-down.
"Out of the three broad areas of the manufacturing sector monitored by the survey, capital goods was the worst affected area in June. Output here declined at a steep rate due to a sharp fall in sales. The sector also saw the fastest contraction in buying levels and was the only to post job shedding."
The stretch new demand growth started in Aug 2020 came to an end in Jun 2021 as COVID-19 restrictions overseas also curtailed international demand. New export orders decreased for the first time in ten months.
The report said that falling new orders, business closures and COVID-19 crisis triggered a reduction in output among Indian manufacturers. Demand weakness and a reduction in production requirements led firms to restrict input purchasing in June.
As a result jobs continued to be shed midway through the year. "The fall in employment was marginal, but took the current sequence of month on month contraction to 15 months," the report said.
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