Country’s manufacturing sector continues to suffer in May due to sharp deterioration in business conditions with the Purchasing Managers’ Index (PMI) hitting at 30.8 in the month, IHS Markit data showed.

As per the latest data, May’s new orders placed with producers continued to fall after April’s record contraction, leading firms to cut jobs at the quickest pace on record.

Manufacturing contributes roughly around 15 per cent in country’s Gross Domestic Product (GDP). Despite such low percentage of contribution, the segment is responsible to generate maximum direct as well as indirect employment.

The latest PMI is comparatively better than April’s PMI which stood at 27.4, pointing to another substantial decline in the health of the country’s manufacturing sector, albeit one that was slightly softer than recorded in April.

In April, the index had slipped into contraction mode, after remaining in the growth territory for 32 consecutive months. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

“The latest PMI data suggested that Indian manufacturing output fell further in May. This result is particularly poignant given the record contraction in April which was driven by widespread business closures,” said Eliot Kerr Economist at IHS Markit.

As per the survey, weaker demand drove output lower following April’s record decline. Consequently, firms cut staff numbers at the quickest pace since data collection began over 15 years ago.

“The further reduction in May highlights the challenges that businesses might face in the recovery from this crisis, with demand remaining subdued while the longevity of the pandemic remains uncertain,” Kerr noted.

The death toll due to COVID-19 rose to 5,394 and the number of cases climbed to over 1.90 lakh, according to the Health Ministry.

Weak demand from international markets added to the deteriorating sales trend, with new business from abroad declining further in May.

“Anecdotal evidence suggested that global measures to stem the spread of COVID-19 continued to stifle exports,” the survey noted.

Going ahead, Indian manufacturers remained optimistic towards the one-year business outlook in May.

Confidence was supported by expectations for a return to growth once all coronavirus-related restrictions are lifted, the survey said adding that “the degree of positivity eased slightly from April and remained historically subdued”.

Meanwhile, India’s GDP growth tumbled to 3.1 per cent in the March quarter, the slowest pace since the global financial crisis more than a decade back. In 2019-20, the Indian economy grew by 4.2 per cent, the slowest in 11 years.