NEW DELHI: Having hit an eight-year high in January, India’s beleaguered manufacturing sector growth slowed down in February as business sentiment took a hit due to concerns over the impact of COVID-19, commonly referred to as the novel coronavirus, outbreak on exports and supply chains, according to a private survey on Monday.
The manufacturing Purchasing Managers’ Index (PMI) for India declined to 54.5 in February from 55.3 in January. The reading was at 52.7 in December.
A figure above 50 indicates expansion, while a sub-50 print signals contraction.
The survey by data analytics firm IHS Markit tracked new orders, output, jobs, suppliers’ delivery time, and stocks of purchases at around 400 manufacturers.
“Factories in India continued to benefit from strong order flows in February, from both the domestic and international markets. However, alarm bells are ringing for Indian goods producers as the COVID-19 outbreak poses threats to exports and supply chains. Businesses became less confident about the year-ahead outlook for output, in turn restricting hiring activity,” said Pollyanna de Lima, principal economist at IHS Markit.
During February, India goods and services tax collection crossed the ₹1 trillion mark for the fourth straight month, even though the mop-up was a tad lower than in January.
India’s economic growth slowed down to an over six-year low in the December quarter, growing at 4.7%, and there is no clear sign of a recovery in sight.
The survey said manufacturing production increased at a similar pace to January’s 91-month high, as firms reacted positively to new business gains and favourable market conditions. “Growth was led by consumer goods makers, followed closely by intermediate goods producers,” it added.
“Although manufacturers expect further increases in demand to support output growth in the year ahead, the degree of optimism weakened from January and was below its long-run average. Survey members were particularly worried about the negative impacts of the coronavirus epidemic on exports and supply chains,” IHS Markit said in a statement.
