India's factory activity dropped for the first time in almost a year in June as limitations to contain the fatal second wave of the coronavirus sparked losses in demand and output, forcing firms to slash more positions, according to a private survey released on Thursday.
The most recent data revealed continuing contractions in factory orders, production, exports, and purchase amounts. Job losses resumed this month as business optimism faded.
For the first time since July 2020, the seasonally adjusted IHS Markit India Manufacturing Purchasing Managers' Index fell below the key no-change mark of 50.0 in June. The most recent reading indicated a moderate but continued decrease in the sector's health.
The period of new order growth that began in August 2020 came to an end in June, with firms attributing the decline in demand to the pandemic. Despite being strong, the rate of contraction was substantially slower than at the start of COVID-19 last year.
COVID-19 restrictions reduced worldwide demand for Indian commodities as well. New export orders fell for the first time in ten months, albeit only slightly.
Falling new orders, firm closures, and the COVID-19 problem all contributed to a drop in output among Indian manufacturing. The drop was mild in comparison to the first half of 2020, but it stopped a ten-month streak of growth.
Firms restricted input purchases in June due to sluggish demand and a reduction in production requirements. Purchasing levels declined at a rapid pace, perhaps the fastest seen since data collection began in March 2005.
Midway through the year, job losses continued. The drop in employment was minor, but it brought the current month-on-month decrease streak to 15 months. Firms reallocated resources to the completion of pending work when faced with reduced workloads. In June, backlogs fell for the second month in a row. Data from June indicated significant decreases in both pre-and postproduction inventories. The former announced his first contraction in ten months.