Manufacturing Sector Dwindles in June After 11 Months

The manufacturing sector in India dwindled in June for the first time in 11 months. The dip is due to the increase in the COVID-19 cases and stringent containment measures, which adversely impacted the demand and caused job losses.

As per a monthly survey conducted by IHS Markit India Manufacturing, the seasonally-adjusted

Purchasing Managers’ Index (PMI) stood at 50.8 in May; it declined to 48.1 in June. The index dipped below the 50.0-mark for the first time in 11 months. According to PMI, a score that is more than 50 translates to expansion; a score that is less than 50 depicts contraction.

As per the latest reading, there has been a dip in the renewal of production, factory orders, quantities of purchases, and exports. The COVID-19 restrictions have also cut down the international demand concerning Indian goods, and new export orders decreased for the first time in 10 months.

With the scope of business fading on a month-on-month basis, losing of jobs continue. 

With respect to pricing, input costs have further increased in June, with companies reporting higher prices concerning chemicals, energy, electronic components, plastics, and metals. As per the survey, out of the three main areas under the manufacturing sector, capital goods were affected the most in June. Output declined to a large extent due to a sharp decline in sales.

New orders, exports, production, and input purchasing got affected in June since containment measures aimed at controlling the pandemic situation amidst restrained demand. Nevertheless, the contraction rates were low in comparison to what it was during the first lockdown.

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