Manufacturing PMI slips in July to 46 after June rebound

NEW DELHI: India's manufacturing activity worsened in July, with the IHS Markit Purchasing Managers' Index falling for the first time since April to 46.0 from 47.2 in June on account of disruptions caused by extension of lockdown induced by COVID-19.

This is the fourth consecutive month in which manufacturing activity has contracted. A PMI reading above 50 shows expansion in activity, while one below 50 indicates contraction.

"The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months," said IHS Markit Economist Eliot Kerr. India has been under a lockdown since Mar 25 but restrictions started easing from midMay to contain the damage to the economy.

However, with COVID-19 cases continuing to spiral, many states were forced to either extend the lockdown or announce stricter localised restrictions.

The total number of confirmed COVID-19 cases now stand at 1.80 mln, with 38,135 deaths. "Anecdotal evidence indicated that firms were struggling to obtain work, with some of their clients remaining in lockdown, suggesting that we won't see a pick-up in activity until infection rates are quelled and restrictions can be further removed," he said.

In July, demand conditions remained subdued as many businesses faced prolonged closures, which led to a faster decline in output and new orders.

However, the decline in manufacturing activity was way slower than that seen in April and May, the months in which the nationwide lockdown was the strictest.