Manufacturing sector declines in June: Report

In June, India’s manufacturing sector saw a decline for the first time in 11 months due to strict restrictions imposed to contain the Kovid-19 epidemic. The Manufacturing Purchasing Managers’ Index (PMI) released today by IHS Markit declined to 48.1 in June. In May it stood at 50.8. A reading above 50 indicates growth and a fall below 50 indicates neutrality. The country’s manufacturing sector has declined for the first time since July 2020.

IHS Markit releases manufacturing and services sector statistics on a month to month basis. IHS Markit Economics Associate Director Pauliana De Lima said the deepening of the Kovid-19 crisis in India had a negative impact on the manufacturing economy. The sequence of growth of new orders, production, exports and input purchases stopped in June. However, in all cases the rate of contraction was lower than in the earlier lock-down. The capital goods sub-category was most impacted in June. A sharp drop in sales has resulted in a sharp drop in production. This region saw the sharpest contraction in buying levels and was the only area where companies pulled out.

It has been told in the report that the process of new demand growth that started in August 2020 ended in June 2021. There was a decline in international demand due to Kovid-19 restrictions abroad as well. New export orders have come down for the first time in ten months.

Production has come down due to reduced new orders, business closures and the Kovid-19 crisis. Companies cut raw material purchases in June due to weak demand and reduced production requirements. The result was that even after half a year had passed, the layoffs continued. The decline in employment was modest, but for the 15th consecutive month, the decline was observed, the report said.