Manufacturing PMI hit by coronavirus in March; factory output in coming months may fall sharply

A record decline in new export orders and a steep fall in the international demand due to coronavirus pandemic majorly contributed to the fall in manufacturing PMI. (Bloomberg image)

Slow output and fewer new businesses have dragged India’s manufacturing PMI to a 4-month low in the month of March. The manufacturing PMI stood at 51.8 in March, continuing the expansion streak since August 2017. A record decline in new export orders and a steep fall in the international demand due to coronavirus pandemic majorly contributed to the fall in manufacturing PMI, said the IHS Markit report. Increased time to supply has also affected the supply-side of the manufacturing sector, it added. At present, the IHS Markit report indicates that the confidence towards the business outlook has fallen to a record low, due to the Covid-19 concerns.

While most of the countries have been severely hit due to coronavirus, India is still in a better position so far. “The Indian manufacturing sector remained relatively sheltered from the negative impact of the global coronavirus outbreak in March, however, there were pockets of disruption and a clear onset of fear amongst firms,” said Eliot Kerr, Economist, IHS Markit.

However, if the cases in India rise steeply, India may have to face worse conditions. Should the trajectory of injections continue in the same vein, the Indian manufacturing sector can expect a much sharper negative impact in the coming months, similar to the scale seen in other countries, Eliot Kerr added. 

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Meanwhile, the manufacturing PMI in the month of January was 55.3, which was near an eight-year high. The high optimism among the purchasing managers was indicating a recovery in the economic condition after a prolonged slowdown. The optimism continued in February as well, but the rapid increase in coronavirus related cases in the country and the complete lockdown situation broke the optimism in the month of March.