Almost every sector of the Indian economy has witnessed the cruelty of coronavirus and the manufacturing sector is one of them. The manufacturing activities have collapsed remarkably in April following the COVID-19 lockdown. As a result of which there is a downfall in the number of working staff.
According to a survey the number of new orders fell for the first time in history at such a sharp rate, surpassing the fall that was seen during the global financial crisis of 2008. The Manufacturing Purchasing Managers’ Index (PMI) fell from 51.8 in March to 27.4 in April which means there is a deterioration in business conditions across the sector. Adding PMI above 50 means expansion, while a score below means contraction.
The manufacturing sector was under the growth mode but the index slipped into contraction mode after 32 consecutive months.
“After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April,” said Eliot Kerr, Economist at IHS Markit.
According to the panellists, this downfall in the production is temporary that was triggered by the restrictive measures to curb coronavirus infection.
Adding to the severity, the export orders also witnessed a sharp decline. Following the first reduction since October 2017 during March, and then fell at a quicker rate in April. “The rate of decline accelerated to the fastest since the series began over 15 years ago,” the survey said.
This fall has also impacted the employment rate. As deteriorating demand conditions are causing manufacturers to cut back staff numbers in their industries. The hike in unemployment was the quickest in the survey’s history.
In terms of prices, both input costs and output prices are lowered significantly as suppliers and manufacturers are offering discounts to secure themselves.
“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.