India's manufacturing activity recovery sees a hiccup in November as coronavirus fears weighed on demand and output, prompting firms to cut jobs for the eighth month in a row, a survey showed.
Nikkei Manufacturing Purchasing Managers' Index (PMI), compiled by IHS Markit, declined to 56.3 in November from October's more than a decade high of 58.9. However, the index remained above the 50-level separating growth from contraction for the fourth month.
Sub-indexes tracking overall demand and output indicated robust growth but rates of expansion were the weakest in three months.
"Although the softening of rates of expansion seen in the latest month does not represent a major setback, since these are down from over decade highs in October, a spike in COVID-19 cases and the possibility of associated restrictions could undermine the recovery," said Pollyanna De Lima, economics associate director at IHS Markit in a note.
"Companies noted that the pandemic was the key factor weighing on growth during November, with COVID-related uncertainty also restricting business confidence."
The recent resurgence in infections in some parts of the country pushed local governments in several states to reimpose some restrictions on mobility, threatening economic recovery.
Manufacturing firms reduced headcount for the eighth month in a row in November, a streak not witnessed since the survey began in March 2005.
Meanwhile, the strongest rise in input costs since August forced firms to increase selling prices at the quickest pace in nine months, indicating overall inflation would remain above the Reserve Bank of India's medium-term target of 2-6%.