India's factory slump deepens in May, headcount slides: PMI

PMI manufacturing PMI business activity business optimism

It was the second-lowest recorded since the series begin in July 2012, said IHS Markit.

"Given the stringency of the lockdown measures imposed in India, it is no surprise to see the severity of the declines in April and May", said Joe Hayes, economist at IHS Markit.

The International Monetary Fund warned last month the global economy will take much longer than expected to recover fully from the virus shock, suggesting a downgrade to its current projection for a 3 percent contraction this year.

Manufacturing conditions in countries across the region all rebounded in May from the record lows recorded in April, but still remained below 50. A silver lining in the gloomy data were employment conditions as the rate of job shedding eased from April, when the drop in staffing levels was the sharpest in more than a decade.

An empty highway leads past the Burj Khalifa skyscraper, center, and other office buildings on the city skyline during the coronavirus lockdown in Dubai, United Arab Emirates, on Friday, April 24, 2020. However, businesses continued to report an impact on customer demand from the Covid-19 pandemic, according to the survey.

"While easing lockdown measures will be positive for the economic environment, it is clear that dislocations will remain", Hayes said.

Firms reported weaker sales here and overseas due to the lockdown, forcing companies to cut back buying activities and reduce inventories.


"The fall in new orders meant that capacity to complete backlogs remained sufficient, although outstanding work dropped only marginally and at the softest pace in over four years", it added.

Irish manufacturing activity suffered a further severe deterioration last month, according to figures published today.

On the price front, cost burdens rose only slightly during May, with the rate of inflation unchanged from April. "Until we see a sustained improvement in demand, manufacturing conditions are likely to remain fragile".

The market-research firm's Caixin China General Manufacturing Purchasing Managers Index (PMI) posted an overall reading of 50.7, up from 49.4 in April, returning to expansion territory.

"While PMI readings are unusually hard to interpret this month, the bigger picture remains the same - the region's manufacturing sector is in a deep recession".

The rebound came after national gross domestic product shrank by 6.8% in the first quarter of the year, as production and spending ground to a halt due to forced business closures, lockdowns, and supply-chain disruptions.

"With some parts of the country allowed to restart limited manufacturing in mid-May, output improved from April's lows where nearly 70% of the economy was shuttered as we sheltered in place".

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