India‘s manufacturing sector activities contracted for the first time in 11 months in June as rising in coronavirus cases, and strict lockdown measures negatively impacted demand and resulted in job losses. According to the monthly IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) survey released on July 1, manufacturing PMI stood at 48.1 in June, down from the ten-month low of 50.8 in May.

The index fell below the critical 50.0 marks for the first time since July 2020. In PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. The poor domestic demand condition had been held responsible for the sector’s poor performance in the previous month of May. The slight growth in May was primarily due to foreign export orders, IHS Markit had said.

As production further fall down in June and finances remained stressed, manufacturing companies again cut jobs. This was the 15th straight month of job losses in a row. The latest reading highlighted the renewed decrease in factory orders, production, exports, and quantities of purchases. Falling new orders, business closures, and the Covid-19 crisis triggered a reduction in output among Indian manufacturers, the survey said. Covid-19 restrictions also reduced international demand for Indian goods, and new export orders decreased for the first time in ten months.

“The intensification of the Covid-19 crisis in India had a harmful impact on the manufacturing economy. Growth of new orders, production, exports, and input purchasing was interrupted in June as containment measures aimed at bringing the pandemic under control restrained demand,” Pollyanna De Lima, Economics Associate Director at IHS Markit, said.