Covid-hit service sector sees sharper declines in sales, output: IHS Markit

New Delhi [India], July 5 : Indian services firms endured further losses of new business as the emergence of pandemic and reintroduction of containment measures restricted demand in June, according to the latest IHS Markit Services Purchasing Managers' Index (PMI) released on Monday.
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 panellists neutral in their assessments of output forecasts for the year ahead.
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 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 16th consecutive month. The pace of contraction remained sharp despite easing from May.
"With India expanding its vaccine options and the government announcing ambitious plans to immunise 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.
The IHS Markit India Services PMI 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 GDP.
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.