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

Daniel Fowler
June 3, 2020

"Despite the improvement, the reading still pointed to a sharp deterioration in operating conditions across the manufacturing sector, the third in as many months", IHS Markit said in a statement. Even as the Indian economy was struggling through a prolonged phase of lockdown before the outburst of coronavirus, the manufacturing PMI remained above 50 since 2018, which showed that businesses and manufacturers were optimistic about the recovery. "Firms output expectation picked up from April's record low but remained among the weakest on record", it said.

IHS Markit said Malaysia registered the softest downturn across the seven monitored countries in May. Other provinces shifted to a more relaxed quarantine, which allowed more businesses to reopen.

Asia's factory pain deepened in May as the slump in global trade caused by the coronavirus pandemic worsened, with export powerhouses Japan and South Korea suffering the sharpest declines in business activity in more than a decade. "Employment in the sector continued to contract, but the pace of job shedding did slow appreciably from April", he added.

It was the second-lowest recorded since the series begin in July 2012, said IHS Markit. Companies were also reluctant to increase output as new orders remained weak.

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

"Some firms noted that an easing of lockdown measures had helped mitigate the downturn in May, alongside efforts to boost online business operations", Tim Moore, economics director at IHS Markit, said.

Employment fell for the fourth time in five months in May, as companies operated with only skeletal workforce.

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But with many of China's trading partners still restricted, its new export orders remained in contraction, the private business survey showed on Monday. Meanwhile, on the price front, both input costs and output charges were low as suppliers and manufacturers themselves offered discounts in an attempt to secure orders. "Raw material prices rose slightly as reductions in global supply started to outweigh weaker demand and lead to difficulties in acquiring inputs", Mr. Owen said.

Taiwan's manufacturing activity also fell in May. A reading above 50 means that manufacturing is growing.

Also, there are some sombre signs in the services PMI reading.

"Industry is likely to have seen an initial jump from the easing of lockdown restrictions".

UAE firms continued to reduce employment numbers in May, although the latest fall was the softest since February.

The outlook gave little hope for an imminent turnaround with firms reporting record low levels of confidence about the next 12 months.

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