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Indian manufacturing activity eased in the month of May, showing a significant loss of growth momentum. Due to the intensification of the COVID-19 crisis and its detrimental impact on demand, companies observed the slowest rises in new work and output for ten months. There was also a substantial slowdown in growth of input purchasing and another round of job shedding.

As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - stood at 50.8 in May as against 55.5 in April. The report said that firms scaled up production volumes during May, but the pace of expansion was modest in the context of historical data. In fact, the rise was the weakest in the current ten-month period of growth.

On the price front, raw material scarcity exerted further upward pressure on input costs. The rate of inflation eased to a four-month low, but remained sharp and above its long-run average. Amid reports of ongoing efforts to protect margins from cost increases, firms lifted their selling prices again in May. The rate of charge inflation was solid, but softened from April.