Home India Corner COVID-19 Impact: India’s Manufacturing Sector Hits New Low In April Amid Lockdown

COVID-19 Impact: India’s Manufacturing Sector Hits New Low In April Amid Lockdown

Nikkei Manufacturing Purchasing Managers’ Index plunged to 27.4 in April from March’s 51.8

Nationwide lockdown placed to combat the spread of coronavirus outbreak in the country throughout April has led to a contraction in India’s manufacturing activities due to a plunge in demands and massive supply chains disruptions, a private-sector survey showed on May 4. Asia’s third-largest economy is taking a serious hit from the lockdown, which started on March 25, as the gross domestic product is most likely to shrink this quarter, according to Reuters poll published last month. 

IHS Markit compiled the survey determining the Nikkei Manufacturing Purchasing Managers’ Index which showed a downfall in the number from 51.8 in March to 27.4 in April, lowest since the survey began in March 2005. According to the IHS survey report, “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 which in turn led to widespread business closures.”

A reading above 50 means expansion and growth whereas below 50 indicates contraction. The index has plummeted below 50 after remaining in growth territory for three consecutive years. “After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April. Record contractions in output, new orders and employment pointed to a severe deterioration in demand conditions”, IHS Markit economist Eliot Kerr said.

The nationwide lockdown, which was extended for another two weeks, has led to businesses being on a standstill with the sharpest reduction in employment as demand conditions deteriorate and the manufacturers resort to major cutbacks in staffing numbers. “There was a hint of positivity when looking at firms’ 12-month outlooks, with sentiment towards future activity rebounding from March’s record low. That said, the degree of optimism remained well below the historical average,” Kerr said.