Factory activity growth slows in February, PMI at 54.5; coronavirus outbreak hits business sentiment

New Delhi: India's factory activity growth slowed in February from the previous month's eight-year high even as business sentiment faded on the back of concerns regarding the impact of the COVID-19 outbreak on exports and supply chains, a private survey showed on Monday.

The Nikkei Manufacturing Purchasing Managers' Index fell to 54.5 last month from January's near eight-year high of 55.3 but remained above the 50-point threshold mark, which separates growth from contraction.

“Factories in India continued to benefit from strong order flows in February, from both the domestic and international markets," said Pollyanna De Lima, principal economist at IHS Markit and author of the report.


As per the survey report, although manufacturers expect further increases in demand to support output growth in the year ahead, the degree of optimism weakened from January and was below its long-run average. Survey members were particularly worried about the negative impacts of the coronavirus epidemic on exports and supply chains.

The subdued mood pushed hiring activity to its lowest in three months.

"However, alarm bells are ringing for Indian goods producers as the COVID-19 outbreak poses threats to exports and supply chains,” de Lima said, adding that businesses became less confident about the year-ahead outlook for output, in turn restricting hiring activity.