Manufacturing output plummets amid COVID-19 lockdown
Record contraction in production
April data pointed to an unprecedented contraction in Indian manufacturing output. The result came amid national lockdown restrictions to help stem the spread of the coronavirus disease 2019 (COVID-19), 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. Meanwhile, both input costs and output prices were lowered markedly as suppliers and manufacturers themselves offered discounts in an attempt to secure orders.
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. Panellists often attributed lower production to temporary factory closures that were triggered by restrictive measures to limit the spread of COVID-19.
Amid widespread business closures, demand conditions were severely hampered in April. New orders fell for the first time in two-and-a-half years and at the sharpest rate in the survey's history, far outpacing that seen during the global financial crisis.
Total new business received little support from international markets in April, as new export orders tumbled. Following the first reduction since October 2017 during March, foreign sales fell at a quicker rate in the latest survey period. In fact, the rate of decline accelerated to the fastest since the series began over 15 years ago.
Deteriorating demand conditions saw manufacturers drastically cut back staff numbers in April. The reduction in employment was the quickest in the survey's history. There was a similar trend in purchasing activity, with firms cutting input buying at a record pace.