Manufacturing activity at 4-month low, PMI at 51.8, optimism low

NEW DELHI: A slow increase in output and new business, coupled with a steep decline in exports following the global coronavirus pandemic, pulled down India’s manufacturing activity to a four-month low in March, a private survey showed on Thursday.

The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) declined to 51.8 in March from 54.5 in February. A reading above 50 indicates expansion, while a figure below signals contraction. The reading signalled the slowest improvement in business conditions since November 2019. “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,” said Eliot Kerr, economist at IHS Markit. Last month’s data was collected over March 12-25. India announced a 21-day lockdown from March 25.

As per the survey, there was evidence that the virus negatively impacted the supply-side of the sector, with delivery times lengthening for the first time in five months. The PMI is based on a survey of purchasing executives in more than 400 companies and is a weighted average of new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).

Export, business confidence hit

A record decline in new export orders due to faltering international demand following the rapid spread of the Covid-19 worldwide contributed to the slowdown. The decline in international sales was the fastest since September 2013 amid widespread lockdowns.

Business outlook confidence plummeted to a record low. Companies remained confident of a rise in output overall, but positivity hit its joint-weakest level since the inception of the PMI series in April 2012. Kerr said the most prominent signs of trouble came from new export orders and future activity indices, which reflected tumbling global demand and softening domestic confidence, respectively.