New work intakes and output contracted at the fastest rates since July 2020.
Covid-hit Service Sector In India Sees Sharper Declines In Sales, Output: IHS Markit
NEW DELHI — As the emergence of pandemic and reintroduction of containment measures restricted demand in June, Indian services firms endured further losses of new business, as per the latest IHS Markit Services Purchasing Managers’ Index released on July 5.
New work intakes and output contracted at the fastest rates since July 2020, which prompted companies to reduce employment again. Business sentiment took another hit, with panelists neutral in their assessments of output forecasts for the year ahead.
“With India expanding its vaccine options and the government announcing ambitious plans to immunize the entire adult population by the end of the year, it is hoped that the pandemic can be brought under control and a sustainable economic recovery can begin,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
Registering 41.2 in June, the seasonally adjusted India Services Business Activity Index highlighted a further contraction in output.
Moreover, falling from 46.4 in May, the latest reading pointed to the fastest rate of reduction since July 2020. Monitored companies commonly indicated that intensification of the Covid-19 crisis and tight restrictions curbed demand for services.
Subdued demand conditions resulted in a second successive monthly drop in new business received by services firms. The pace of contraction was sharp and the quickest since July 2020.
Business activity and new orders decreased in four out of the five broad areas of the service economy, with the fastest rates of contraction registered in consumer services. Transport and storage was the only segment to post growth.
International demand for Indian services deteriorated further in June, with new export orders falling for the 16th consecutive month. The pace of contraction remained sharp despite easing from May.
Earlier, survey participants reported a sharp increase in input costs. Meanwhile, selling prices rose only fractionally as a vast majority of companies left their fees unchanged due to competitive pressure.
The upturn was associated with elections, higher demands, and successful marketing growth was curbed by the detrimental impact of the Covid-19 pandemic on footfall.
“The escalation of pandemic and reinstatement of restrictions could cause a notable slowdown in growth during April,” said Lima.
The IHS Markit India Services Purchasing Managers’ Index is compiled from responses to questionnaires sent to a panel of around 400 service sector companies.
The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate, and business services.
The panel is stratified by detailed sector and company workforce size based on contributions to Gross Domestic Product.
IHS Markit is a world leader in critical information, analytics, and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics, and solutions to customers in business, finance, and government.
(With inputs from ANI)
(Edited by Amrita Das and Saptak Datta)