New Delhi: Due to the second wave of corona virus, the growth rate of the manufacturing sector of the country has slowed down again. In fact, due to renewed uncertainty over Covid-19, the country’s manufacturing activities have reached a three-month low in November 2020 due to a decline in factory orders, exports and purchases. However, before this, the Indian economy was slowly getting back on track, but it has declined sharply in November. This brought the India Manufacturing Purchasing Managers Index (PMI) to 56.3 in November 2020, from 58.9 in October.
Strengthening in the manufacturing sector even after the downturn
Even after the decline in PMI, the manufacturing sector is considered strong in November 2020. In fact, with PMI data above 50, the market is considered to be expanding. A lower PMI is defined as a contraction of the market, i.e. a decrease in economic activities in the market. Poliana de Lima, Associate Director (Economics), IHS Markets, said that even after the decline in November, the situation in the sector is still under control. He said that reduction in the rate of expansion in manufacturing activities is not a shock. This figure has come down slightly after nearly a decade of highs in October. Increased cases of Covid-19 may affect this improvement.
‘PMI drops due to fear of lockdown’
According to Lima, the recovery environment remains in the Indian manufacturing sector. October has seen a steady increase in new orders and production. He attributed the decline in November’s PMI data to market panic over fears of a lockdown due to rising cases of corona infection. Explain that according to the IHS survey, the growth rate of New Orders in November 2020 has been at the lowest level in three months. The survey found that despite increasing cases of corona infection, domestic demand remained high, leading to increased sales. Lima said the corona epidemic has eroded business confidence.
November has not been good in terms of employment
According to the IHS survey, production is expected to increase in the near future, but business confidence is being adversely affected by the Corona epidemic, public policies and the depreciation of the rupee. November has not been very good in terms of employment. As in October, layoffs continue in November. Employment continued to decline last month, as guidelines on social distance also affected the work of companies. Lima said that the main reason for the decline in employment was having fewer employees to comply with social discrimination. That is why companies hired fewer employees. In terms of prices, input costs and output charges have risen sharply, above average.
Despite the decline in PMI, the Indian economy has recovered as expected. Gross Domestic Product (GDP) declined to 7.5 percent in the July-September 2020 quarter. In the first quarter of the current financial year, the GDP had declined at a rate of 23.9 percent. The lockdown then caused by the Corona epidemic had a severe impact on economic activity.
