Lockdown measures implemented to curb Covid-19 outbreak continued to subdue the Indian service sector’s growth in July.
Accordingly, the latest PMI survey data showed that growth remained severely restricted by lockdown measures implemented to curb the coronavirus disease 2019 pandemic in July.
“Further substantial reductions in both activity and inflows of new work were recorded, as ongoing lockdown restrictions stifled demand and forced companies to cease operations,” IHS Markit said in a statement.
“Subsequently, firms made further cuts to staff numbers, with the rate of job shedding the most marked on record.”
According to the survey, the 12-month outlook for output was negative for a third successive month, with fears of a substantial economic downturn common among survey respondents.
Consequently, the IHS Markit India Services Business Activity Index registered a reading of 34.2 in July, and despite rising slightly from 33.7 in June, “signalled a further rapid reduction in service sector output”.
An index reading of above 50 indicates an overall increase in economic activity, or growth, and below 50, an overall decrease.
“Moreover, the latest reading was among the lowest recorded in nearly 15 years of data collection, surpassed only by the unprecedented falls in the previous three months,” the statement said.
Furthermore, deceleration in manufacturing and services dipped the overall the Composite Output Index in July.
Resultantly, the Composite Output Index fell to 37.2 in July, down from June’s 37.8 “the latest figure was indicative of a quicker rate of contraction, albeit not as severe as those in April and May.”