NEW DELHI: India’s services sector activity remained in deep downturn in June because the Covid-19 pandemic curtailed intakes of new work orders and disrupted enterprise operations, a month-to-month survey mentioned on Friday.
The IHS Markit India Services Business Activity Index was at 33.7 in June, up from 12.6 recorded in May.
Despite the rise, the Indian services sector activity contracted for a fourth successive month in June. A print above 50 means growth and a rating beneath that denotes contraction, as per the IHS Markit India Services Purchasing Managers’ Index (PMI).
“India’s service sector continued to struggle in June as the country’s coronavirus crisis worsened,” said Joe Hayes, Economist at IHS Markit.
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.
The death toll due to COVID-19 in the country has increased to 18,213 and the number of infections has spiked to 6,25,544, according to the health ministry.
Hayes further said though some companies have seen activity stabilise, but this is most likely just reflecting closures and temporary suspensions. While this will have contributed to a rise in the PMI figures, “this actually is not a promising signal”.
“A big fraction of the survey panel are nonetheless reporting falling activity and order guide volumes, reflecting an intensely difficult home image in India,” Hayes noted.
According to the survey, the slower rate of decline was reflective of some stabilisation in activity levels, with around 59 per cent of firms reporting no change in output since May. Meanwhile, “solely four per cent registered progress, whereas 37 per cent recorded a discount,” it mentioned.
Meanwhile, whole new orders fell at a pointy tempo throughout June, which corporations attributed to decreased consumption habits. In some cases, prospects had closed their companies because of the unfavourable setting. Besides, there was yet one more steep drop in export gross sales.
On the costs entrance, for a 3rd month working, Indian service suppliers reported a discount to their enter prices in June and decrease bills have been handed by means of to shoppers through reductions throughout the month.
The survey mentioned employment throughout the Indian service sector fell throughout June. Job losses have been attributed to decrease enterprise necessities, though some corporations reported poor employees availability.
Meanwhile, the Composite PMI Output Index, which measures mixed services and manufacturing output, rose to 37.8 in June, up from 14.8 in May, however nonetheless beneath the essential 50 degree which separates progress from contraction.
While manufacturing manufacturing fell reasonably, edging nearer to stabilisation, services activity continued to lower considerably, the survey famous.
The IHS Markit India Services PMI is compiled by IHS Markit from responses to questionnaires despatched to a panel of round 400 service sector corporations. The sectors lined embrace client (excluding retail), transport, data, communication, finance, insurance coverage, actual property and enterprise services.