In April 2020, India’s manufacturing and services sectors recorded the sharpest contraction among the world’s top 10 economies.
The purchasing managers’ index (PMI) for services, a popular reading released by London-based IHS Markit, stood at 5.4 last month, down from 49.3 in March. A PMI reading below 50 means contraction.
The PMI for the manufacturing sector fell from 51.8 in March to 27.4 in April, according to data released this week.
The steep drop in services activity, which accounts for 52% of India’s GDP, is particularly worrying.
“Historical comparisons with GDP data suggest that India’s economy contracted at an annual rate of 15% in April. It is clear that the economic damage of the Covid-19 pandemic has so far been deep and far-reaching in India,” said Joe Hayes, an economist at IHS Markit.
India is under a stringent lockdown to tackle the outbreak. Almost all services, with few exceptions like banking and post, have been curtailed.
The composite PMI Index, which combines services and manufacturing activities, dropped to a record low of 7.2 in April, compared with 50.6 in March.
The survey found record contractions in output, new orders, and a drop in employment in the manufacturing sector. Also, “there was evidence of unprecedented supply-side disruption, with input delivery times lengthening to the greatest extent since data collection began in March 2005,” according to Hayes.