Latest PMI data pointed to another deterioration in business conditions faced by Indian goods producers during June. The downturn was primarily driven by sharp contractions in both output and new orders, with regional lockdown extensions severely hampering demand conditions. That said, both rates of decline eased considerably from May, continuing the trend towards stabilisation since April's historic lows. Meanwhile, firms continued to reduce staff numbers at a marked pace.
Another key factor behind the decline in operating conditions was a further decrease in new business during June. The latest contraction extended the current sequence of falling sales to three months, although the pace of reduction decelerated to the slowest since the introduction of lockdown measures in March.
Overall demand received little support from international markets, with new export orders falling for the fourth month in a row. Although the rate of decline eased to the softest since March, it remained sharp overall. When explaining the reduction in demand, panellists often cited the coronavirus pandemic.
Commenting on the latest survey results, Eliot Kerr, Economist at IHS Markit, said: "India's manufacturing sector moved towards stabilisation 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."