Manufacturing PMI is at 7-month low on freshly designed COVID-19 lockdown

A private survey showed that India’s factory activity grew at the weakest pace in seven months to prevent a resurgence in COVID-19 cases, forcing firms to cut back again.

Last week, the Indian government advised states to try to control the rapid spread of the virus. Strict restrictions on activity suggest that factories may be in tough April.

Expansion slow

The Nikkei Manufacturing Purchasing Managers’ Index compiled by IHS Market declined to a 55.4-month low from 57.5 in February last month, but remained above the 50-level growth from contraction for the eighth straight month.

A faster sub-index tracking overall demand fell to the lowest since August 2020, despite overseas orders growing at a rapid pace in March. Output also grew at the weakest pace in seven months.

“The survey participants indicated that the rise in the COVID-19 pandemic led to an increase in demand, while increased input purchases led to a spike in costs,” said Polina de Lima, IHS market’s economics associate director.

He added that since the expansion of COVID-19 restrictions and measures for lockdown have been reintroduced in many states, Indian manufacturers are set to experience a challenging month in April.

The take-off rate is fast

Although Asia’s third-largest economy was projected to grow at a faster pace than before in this financial year, according to a Reuters poll published last week, a significant majority of economists said a growth outlook in coronovirus cases The biggest risk was for.

After a year-long job cut, factories tightened the take-off rate to six months in March.

Both input and output prices have slowed in the past month, reflecting overall inflation that reached a three-month high in February and could remain within the Reserve Bank’s inflation target of 2-6%.

This will help the central bank to maintain its policy stance to support economic growth but optimism about the coming year.

“While predictions suggest that the vaccination program will curb the disease and reduce production growth in the coming year, which means business confidence remained positive, increasing uncertainty over near-term outlook due to increase in COVID-19 cases , Which has pulled the sentiment for seven months. Less, ”said Ms. de Lima.