India Service Sector Contracts Sharply In June
India’s service sector contracted at a sharper pace due to the economic disruption caused by Covid-19 pandemic, survey results from IHS Markit showed on Friday.
The services Purchasing Managers’ Index rose to 33.7 in June from 12.6 in May. The reading has remained below 50 neutral mark for the fourth straight month.
New orders declined at a sharper pace in June and customers closed their business due to the unfavorable environment. Export sales declined steeply in June.
Companies became more pessimistic towards their prospects for the coming twelve months and business confidence fell to a survey low.
Employment declined in June due to lower business requirements. Outstanding contracts rose in June due to the capacity pressure.
Input cost decreased for the third straight month in June and running costs were down due to lower activity. Lower expenses were passed through to clients via discounts in June.
The composite index rose to 37.8 in June from 14.8 in the previous month.
“India’s service sector continued to struggle in June as the country’s coronavirus crisis worsened,” Joe Hayes, an economist at IHS Markit, said.
“Simply put, the country is gripped in an unprecedented economic downturn which is certainly going to spill over into the second half of this year unless the infection rate can be brought under control,” Hayes added.