Lockdown drags mfg PMI to record low of 27.4 in April as units remain shut

The nationwide lockdown in April, coupled with a crash in export orders led to unprecedented contraction in manufacturing output, said the monthly Nikkei India Manufacturing Purchasing Managers’ Index (PMI) survey released on Monday.
On a worrying note, the survey pointed out that reduced demand led to new businesses collapsing at a record pace in April, while firms sharply pared their staff numbers.
Manufacturing PMI stood at just 27.4 in April, showing the sharpest deterioration in business conditions across the sector since data collection began over 15 years ago. In PMI parlance, a figure above 50 means expansion, while a score below that denotes contraction. PMI had already been on a downward curve, registering 51.8 in March, much below the eight-year high of 55.3 in January.
Despite industrial activity being partially opened after April 20, manufacturing activity could not resume fully as lack of labour and raw materials remained widespread while supply chains could not be established, industry bodies said. “After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April,” said Elliot Kerr, economist at IHS Markit.
Tough situation
India’s overall industrial production rebounded in February to a seven-month high of 4.5 per cent, up from January’s 2 per cent. Figures for March, set to be released next week are expected to be slightly hit since lockdown began late in the month, on March 25. But it can take a bad turn given how the output of the 8-core sectors of the economy saw a record contraction of 6.5 per cent in March.

However in April, the PMI survey pointed out widespread business closures amid demand conditions remaining severely hampered. 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.

Covid-19: Biz sentiment sinks to record low; mfg activity down in March

The country's manufacturing sector activity grew at the slowest rate in four months during March, hampered by softer rises in new business as international demand faltered owing to the coronavirus pandemic, a monthly survey said on Thursday.
IHS Markit India Manufacturing PMI fell to 51.8 in March, from 54.5 in February, signalling the slowest improvement in business conditions since November 2019. This is the 32nd consecutive month that the manufacturing PMI has remained above the 50-point mark.
In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. "The Indian manufacturing sector remained relatively sheltered from the negative impact of the global coronavirus outbreak in March, however, there were pockets of disruption and a clear onset of fear amongst firms," Eliot Kerr, Economist at IHS Markit, said.
Moreover, the confidence towards the business outlook plummeted to a record low, with positivity tapered by Covid-19 concerns, the survey said.
"Should the trajectory of injections continue in the same vein, the Indian manufacturing sector can expect a much sharper negative impact in the coming months, similar to the scale seen in other countries," Kerr said.
According to the survey, the sentiment towards the 12-month business outlook weakened in March. Some panelists said there are fears of prolonged shutdowns due to Covid-19 and the associated negative impact on demand.
Commenting on the latest India survey results, Kerr said new orders and output both grew at softer rates, but those readings were relatively tame compared to those seen at goods producers in Europe and other parts of Asia.

"The most prominent signs of trouble came from the new export orders and future activity indices, which respectively indicated tumbling global demand and softening domestic confidence," Kerr noted.

India services PMI expands at fastest pace in 5 months on buoyant demand

Current Affairs
Activity in India's dominant service industry accelerated to a five-month high in December as demand rose at the fastest pace in more than three years, a private business survey showed on Monday.
The findings are likely to provide some relief to markets and spur hopes of an economic recovery in Asia's third-largest economy, which registered its weakest growth since 2013 in the July-September quarter.The Nikkei/IHS Markit Services Purchasing Managers' Index rose to 53.3 in December from November's 52.7, holding above the 50-mark that separates growth from contraction for the second straight month.
"It's encouraging to see the Indian service sector continuing to recover from the subdued performances noted in September and October," Pollyanna De Lima, principal economist at IHS Markit, said in a release."More importantly, the news of sustained job creation, robust new order growth and a pick-up in business confidence suggest that expansion can be maintained in the early part of 2020."
A sub-index tracking new business climbed to its highest since October 2016, encouraging firms to increase headcount.Service providers were more optimistic about growth in the year ahead and international demand continued to rise.A strong service sector is crucial India as it contributes over 60% of gross domestic product. If the momentum can be sustained, it would drive a faster economic recovery.A sister survey on Friday showed factory activity accelerated at the fastest pace in seven months in December on strong domestic demand and output.

Taken together, they pushed the composite PMI, which includes both manufacturing and services, to 53.7 last month from November's 52.7, its highest in five months."With manufacturing sector weakness also fading in December...Read More