India's Manufacturing PMI At 10-Month Low; Heads Towards Stagnation In May

Despite the fact that the health of India's manufacturing sector improved in May, the newest figures suggest a considerable loss of growth momentum. Companies had the smallest increases in new work and output in ten months as the COVID-19 problem intensified and its negative effects on demand.

Manufacturing activity in India fell in May compared to April, but showed signs of recovery in business conditions, according to data released on Tuesday by analytics firm IHS Markit.

Manufacturing PMI fell to 50.8 in May, down from 55.5 in April, according to the monthly IHS Markit India Manufacturing Purchasing Managers' Index (PMI) survey issued on May 1.

The major sub-component of the headline statistic, new orders, climbed at the weakest rate since the current period of expansion began in August 2020. The COVID-19 dilemma, according to panel members, stifled demand.

During May, businesses increased their output quantities, though at a slower pace than in previous months. In reality, it was the smallest increase in the current ten-month period of expansion. The escalation of the epidemic and difficulties obtaining raw materials, according to anecdotal evidence, slowed the recovery.

Companies cut their payroll numbers even more due to 19 constraints and a lack of fresh work. The drop in employment was gradual at first, but it picked up speed in April.

Firms raised their selling prices again in May, despite indications of continuous efforts to safeguard margins from cost rises. The rate of charge inflation remained stable, but it has slowed since April.
In terms of stockpiles, input holdings increased little while post-production inventories shrank significantly.

Manufacturers began to be concerned about the pandemic's harmful effects on their operations. Companies expect output to increase in the coming year, but overall optimism has dropped to a ten-month low.

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