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India’s manufacturing activity witnessed an unprecedented contraction in April as the lockdown to combat the rapid spread of the coronavirus led to a slump in demand and massive supply chain disruptions, according to the IHS Markit purchasing managers index (PMI) survey.
At 27.4 in April, the seasonally adjusted IHS Markit India Manufacturing PMI fell from 51.8 in March. “The latest reading pointed to the sharpest deterioration in business conditions across the sector since data collection began over 15 years ago. The decline in operating conditions was partially driven by an unprecedented contraction in output,” IHS Markit said.
Economists and global rating firms have already said economic growth is set to decline sharply below the 1 per cent level. “The result came amid national lockdown restrictions to help stem the spread of the coronavirus disease, which in turn led to widespread business closures. In an environment of severely reduced demand, new business collapsed at a record pace and firms sharply reduced their staff numbers,” it said.
Meanwhile, both input costs and output prices were lowered markedly as suppliers and manufacturers themselves offered discounts in an attempt to secure orders, IHS Markit said.
Eliot Kerr, economist at IHS Markit, said: “After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April. In the latest survey period, record contractions in output, new orders and employment pointed to a severe deterioration in demand conditions.”
There was evidence of unprecedented supply-side disruption, with input delivery times lengthening to the greatest extent since data collection began in March 2005, Kerr said.
