The manufacturing industry in India was hit in June as the pandemic-related stringent restrictions in the country negatively impacted consumption, according to an IHS Markit report.
In June, factory orders, production and exports contracted which led to fading market optimism. Markets started to recover in August 2020, but June 2021 marked the end of the growth as the economy was struck with the second wave of the COVID-19 pandemic.
The PMI index fell to 48.1 in June, from May’s 50.8. At the beginning of the quarter, PMI averaged 51.5, the lowest three-month figure in a year. A figure below 50 signifies contraction.
The COVID-19 restrictions hurt demand for international demand for Indian goods resulting in lower exports, said the IHS report. Exports decreased marginally for the first time in 10 months.
The contraction in demand, manufacturing, and fall in new orders was not as severe as in the first half of 2020, although June ended the ten months of growing trend since August 2020.
Raw material scarcity and issues with transportation on the back of lockdown restrictions continued to hamper growth throughout June. Input costs for sectors including metals, plastic, chemicals, electronic components, and energy continued to grow further in June. The increased costs were also passed on to the consumers as several units announced a hike in product prices.