Services sector’s PMI shows slight uptick in June

According to data released by IHS Markit, services Purchasing Manager’s Index (PMI) in June improved to 33.7 from 12.6 in May, but is still well below the 50-mark that separates expansion from contraction.

Services sector activity, which makes up more than half of India’s gross domestic product (GDP), contracted for the fourth consecutive month in June due to the unfolding Covid-19 pandemic, although the pace of contraction slowed.

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,” said Joe Hayes, an economist at IHS Markit. (Bloomberg file photo. Representative image)

According to data released by IHS Markit, services Purchasing Manager’s Index (PMI) in June improved to 33.7 from 12.6 in May, but is still well below the 50-mark that separates expansion 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 said.

The manufacturing PMI released on Wednesday showed a decline at 47.2 in June, improving from 30.8 recorded in May, signalling faster normalisation of activity since 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,” said Joe Hayes, an economist at IHS Markit.