The HSBC Manufacturing Purchasing Managers’ Index (PMI) data for May shows a moderation, but growth continues to be strong. Not so, however, for employment growth. The employment component of the manufacturing PMI for India shows employment growth has been practically absent. This sub-index for employment since September has been above 50 only in October and 50 in December and April 2011. It remained below 50 during all the other months, which indicates employment in manufacturing has been contracting.
Also see | Employment contracts in spite of strong output growth (PDF)
Since the PMI survey is based on large firms, it’s a sign how restrictive labour laws slow employment in manufacturing in the formal sector.
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