GBP/INR starts the week on a bullish note, thus carrying on an uptrend that took off on May 15. Currently, one British pound buys 93.502 Indian rupees, up 0.26% as of 6:30 AM UTC.
The sterling is favored by the UK’s effort to gradually reopen the economy. Elsewhere, the rupee is under pressure on fresh economic updates.
Researcher IHS Markit released on Monday India’s manufacturing activity data, which shows the industry continues to suffer from the lockdown measures imposed at the end of March. Local factories are cutting staff at the fastest pace on record.
India’s manufacturing purchasing managers index (PMI) increased to 30.8 last month, from 27.4 in April. The 50 mark separates growth from contraction. The decline is much worse than analysts’ expectations of a rebound to 38.0 in May.
Eliot Kerr, Economist at IHS Markit, commented:
“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.”
The report suggests weak demand from foreign markets which comes on top of declining sales.
The drop in demand has resulted in massive reductions in worker numbers. The rate of job cuts increased at the fastest pace in the survey’s history.
India’s Unemployment Maintains Above 23%
Separately, the Centre for Monitoring Indian Economy (CMIE) said earlier today that the unemployment rate last month rose to 23.48%, slightly improving from April’s 23.52%.
It means that a quarter of the country’s labor force is out of work due to the pandemic and the restrictive measures. India has confirmed over 190,535 COVID cases and 5,394 deaths.
Last week, the government said that the infrastructure output, which accounts for about 40% of industrial production, contracted by 38.1% in April compared to the same period in 2019. This is the worst performance in many years.
As for the UK, it has moved towards easing despite some scientists claiming that lifting restrictions was premature. Foreign minister Dominic Raab said that the cautious reopening of the economy was “the right step to be taking.”
