India: Private sector PMI continues gradual recovery in June
July 3, 2020
The composite Purchasing Managers’ Index (PMI) produced by IHS Markit climbed to 37.8 in June from 14.8 in May. Despite the increase, the PMI remained below the 50-threshold and therefore indicated another decrease in business activity from the previous month.
The services PMI rose to 33.7 in June from 12.6 in May as businesses reported more stable output levels, with around 59% of firms reporting no change in output in June compared to the previous month. Suppressed demand, meanwhile, led to another sharp fall in new orders, with some survey respondents noting customers had closed their businesses. Looking ahead, business confidence about future activity fell to the lowest on record, contributing to another steep drop in employment. On the pricing front, input costs continued to fall, although at a slower pace than in May, while output costs fell at a similar pace as in May.
On the manufacturing side, the PMI rose to 47.2 in June from 30.8 in May. Commenting on this, Eliot Ker, economist at IHS Markit, said:
"India's manufacturing sector moved towards stabilization in June, with both output and new orders contracting at much softer rates than seen in April and May. However, the recent spike in new coronavirus cases and the resulting lockdown extensions have seen demand continue to weaken. Should case numbers continue rising at their current pace, further lockdown extensions may be imposed, which would likely derail a recovery in economic conditions and prolong the woes of those most severely affected by this crisis."
Author: Edward Gardner, Economist