Services sector’s PMI shows slight uptick in June

Services sector exercise, which makes up greater than half of India’s gross home product (GDP), contracted for the fourth consecutive month in June because of the unfolding Covid-19 pandemic, though the tempo of contraction slowed.

According to knowledge launched by IHS Markit, providers Purchasing Manager’s Index (PMI) in June improved to 33.7 from 12.6 in May, however continues to be nicely under the 50-mark that separates growth from contraction.

“Although the downturn lost further momentum in June, it remained excessively strong as the pandemic curtailed intakes of new work and disrupted business operations. The slower rate of decline was reflective of some stabilisation in activity levels, with around 59% of firms reporting no change in output since May. Meanwhile, only 4% registered growth, while 37% recorded a reduction,” IHS Markit stated.

The manufacturing PMI launched on Wednesday confirmed a decline at 47.2 in June, bettering from 30.eight recorded in May, signalling quicker normalisation of exercise because the nationwide lockdown was lifted on June 1. “India’s service sector continued to struggle in June as the country’s Covid-19 crisis worsened. The country is gripped in an unprecedented economic downturn that is going to spill over into the second half of the year unless the infection rate can be brought under control,” stated Joe Hayes, an economist at IHS Markit.

Employment throughout the providers sector fell in June. “Job losses were attributed to lower business requirements, although some firms reported poor staff availability. Consequently, there were signs of capacity pressures building as outstanding contracts rose, despite overall activity continuing to fall sharply,” the info analytics agency added. “Business confidence slid to a survey low and also pointed to strongly negative expectations towards activity levels in the year ahead. The heightened risk of a protracted recession was commonly noted by pessimistic firms,” IHS Markit added.