Regional lockdowns to contain the spread of COVID-19 outbreak hampered India's manufacturing output and demand conditions in June.
The latest reading of seasonally adjusted IHS Markit India Manufacturing PMI index showed the downturn was primarily driven by sharp contractions in both output and new orders, with regional lockdown extensions severely hampering demand conditions.
However, the rate of decline eased considerably from May, continuing the trend towards stabilisation since April's historic lows.
Consequently, the seasonally adjusted PMI reading inched up to 47.2 in June from 30.8 in May.
"Despite the rise, the latest reading pointed to a third successive monthly decline in the health of the manufacturing sector, albeit one that was far softer than registered in April and May," the survey report said.
According to the report, panellists continued to suggest that coronavirus-related restrictions had constrained production capacity.
"That said, the rate of contraction eased considerably from May and was the softest since an expansion in March," the report said.
"Another key factor behind the decline in operating conditions was a further decrease in new business during June. The latest contraction extended the current sequence of falling sales to three months, although the pace of reduction decelerated to the slowest since the introduction of lockdown measures in March."
As per the report, overall demand received little support from international markets, with new export orders falling for the fourth month in a row.
"Although the rate of decline eased to the softest since March, it remained sharp overall. When explaining the reduction in demand, panellists often cited the coronavirus pandemic," the report said.