Covid 2.0 heavily dented India’s June service sector output which contracted at the fastest pace since July 2020.
Besides, the survey data indicated that services firms endured further losses of new business as the emergence of the pandemic and the reintroduction of containment measures restricted demand.
Consequently, the seasonally adjusted India Services Business Activity Index contracted to 41.2 (index value) in June, down from 46.4 reported in May.
The seasonally adjusted index reading remained above the critical 50-mark that separates growth from contraction.
“Monitored companies commonly indicated that the intensification of the COVID-19 crisis and tight restrictions curbed demand for services,” IHS Markit said in the PMI report.
“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.”
According to panel members, 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.
However, ‘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 the sixteenth consecutive month. The pace of contraction remained sharp, despite easing from May.”