The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index fell to 27.4 in April from 51.8 in March. The latest reading pointed to the sharpest deterioration in business conditions across the sector since data collection began over 15 years ago.
A reading above 50 on the index shows expansion while below it indicates contraction.
“April data pointed to an unprecedented contraction in Indian manufacturing output. The result came amid national lockdown restrictions to help stem the spread of the coronavirus disease 2019 which in turn led to widespread business closures,” IHS Markit said in the survey report.
The survey tracks new orders, output, jobs, suppliers’ delivery time, and stocks of purchases for around 400 manufacturers.
As per the report, new orders fell for the first time in two-and-a-half years.
“After making it through March relatively unscathed, the Indian manufacturing sector felt the full force of the coronavirus pandemic in April,” said Eliot Kerr, an economist at IHS Markit.
In an environment of severely reduced demand, new business collapsed at a record pace and firms sharply reduced their staff numbers, according to the survey report.
Kerr added that in the latest survey period, record contractions in output, new orders and employment pointed to a severe deterioration in demand conditions.
“Meanwhile, there was evidence of unprecedented supply-side disruption, with input delivery times lengthening to the greatest extent since data collection began in March 2005,” Kerr said.
However, 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.