A contraction in manufacturing narrowed sharply in June, having recovered from a record fall in April, as various lockdown-related curbs were lifted since June 1. Nevertheless, the downturn continued to be driven by a fall in both output and new orders and the rate of workforce contraction remained among the quickest since data collection began in March 2005.
The manufacturing Purchasing Manager’s Index (PMI) touched 47.2 in June, compared with 30. 8 in May and 27.4 in April. A reading of above 50 indicates expansion, while a sub-50 print suggests contraction.
The latest contraction extended the current sequence of falling sales to three months, although the pace of reduction decelerated. Overall demand received little support from international markets, with new export orders falling for the fourth month in a row.
On the cost front, input prices faced by Indian manufacturers continued to decline. “Amid falling cost burdens, manufacturers opted to continue cutting their average output prices. Despite easing for the second month in a row, the rate was solid overall. Anecdotal evidence suggested that firms reduced charges in an attempt to support sales.,” according to a statement by HIS Markit, which releases the survey.
While the firms surveyed remained positive towards the 12-month business, with sentiment strengthening to a four-month high, the degree of optimism still remained far weaker than the historical average amid fears of a prolonged economic downturn due to the coronavirus outbreak, it said.