Services PMI shrinks for 5th month in a row
NEWDELHI: India’s services industry, which accounts for more than half of the nation’s gross domestic product, contracted for a fifth straight month in July, although at a slightly slower pace than in the prior month, as sporadic regional lockdowns and weak demand constrained economic activity.
The purchasing managers’ index (PMI) for services inched up slightly to 34.2 in July from 33.7 in June, according to the survey by analytics firm IHS Markit. The reading was still well below the 50 mark that divides contraction from expansion.
India is nearing the 2-million mark in Covid-19 cases, the thirdhighest in the world after the US and Brazil. More than 40,000 have died so far, prompting local authorities to impose lockdowns to stem the spread of the virus.
“Further substantial reductions in both activity and inflows of new work were recorded, as ongoing lockdown restrictions stifleddemandandforcedcompanies to cease operations. Subsequently, firms made further cuts to staff numbers, with the rate of job shedding the most marked on record. Looking ahead, the 12-month outlook for output was negative for a third successive month, with fears of a substantial economic downturn common among survey respondents,” the analytics company said in a statement.
Data released by IHS Markit on August 3 showed India’s manufacturing PMI declined to 46 in July from 47.2 in June.
The pandemic and subsequent introduction of lockdown measures continued to weigh heavily on the economy, Lewis Cooper, an economist at IHS Markit, said, adding that he estimates an annual contraction in India’s GDP of more than 6% in FY21.