Factory output in June continues to shrink in double-digit; manufacturing IIP takes maximum hit in Q1

By: |
August 11, 2020 6:42 PM

Mining shrank 19.8 per cent while manufacturing and electricity shrank 17.1 per cent and 10 per cent respectively in June.

IIP, industrial production, factory output, manufacturing

Even as the economy gradually unlocks after a strict nationwide lockdown, industrial production fell by 16.6 per cent in the month of June. Mining shrank 19.8 per cent while manufacturing and electricity shrank 17.1 per cent and 10 per cent respectively in June, according to the Ministry of Statistics & Programme Implementation. In the first quarter of the current fiscal, the manufacturing sector took the maximum hit, contracting by 40.7 per cent. The fall in manufacturing sector consequently pulled down the overall factory output by nearly 36 per cent in the quarter.  However, June’s factory output saw some recovery compared to the previous months.

The Index for the month of June 2020 stood at 107.8, compared to 53.6 and 89.5 for April and May 2020. In view of the preventive measures and announcement of nation-wide lockdown, a large number of the industrial sector establishments were not operating from the end of March, 2020 onwards. This has had an impact on the items being produced by the establishments during the period of lockdown, the government said. With the lifting of restrictions in the subsequent periods, industrial activity is resuming, it added.

Also Read: Modi govt’s ‘Agriculture Infrastructure Fund’ likely to raise farm’s share in GDP, says farmers’ body

Meanwhile, the manufacturing PMI, which fell to a record low in the month of April, showed some recovery in May, and further in June 2020, but it once again slipped in July. The manufacturing PMI stood at 46 in July, which was 47.2 in June 2020, and 30.8 in the month of May. Business conditions continued to deteriorate in July amid prolonged closures and the health of the manufacturing sector declined at a slightly quicker pace, said the IHS Markit report. Both output and new orders continue to fall markedly and business sentiment remained historically subdued despite improving, it added.

While June’s recovery is levelled off in July, according to the PMI data, the quantum of industrial production may also take a severe hit in the month of July. The rising number of coronavirus cases in the country and the unavailability of the vaccine have increased the uncertainty in the economy.

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