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India Manufacturing Sector Activity Continues To Deteriorate

India's manufacturing conditions recorded another sharp deterioration in May due to fall in demand, output and employment amid the ongoing coronavirus lockdown, survey results from IHS Markit showed on Monday.

The headline IHS Markit manufacturing Purchasing Managers' Index, or PMI, increased to 30.8 in May from 27.4 in April. Any reading below 50 indicates contraction in the sector.

New orders continued to fall in May and were the second-fastest since the inception of series in March 2005. Demand from international market deteriorated further.

Firms continued to cut their production in May. The number of workers declined further due to lower production requirements. The rate of contraction in workforce accelerated to the fastest in the survey history.

Purchasing activity reduced in May as need for inputs decreased.

On the price front, input prices declined further in May and suppliers reduced their prices to secure orders.

Manufacturers were optimistic toward the business outlook for next 12 months in May, hopping to return to growth after coronavirus-related restrictions are lifted.

"This result is particularly poignant given the record contraction in April which was driven by widespread business closures," Eliot Kerr, an economist at IHS Markit, said.

"The further reduction in May highlights the challenges that businesses might face in the recovery from this crisis, with demand remaining subdued while the longevity of the pandemic remains uncertain," Kerr added.

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