“Service sector activity in India is still effectively on hold, latest PMI data suggests, as output fell at an extreme rate once again during May,” IHS Markit report said
India’s services activity saw a marginal recovery in May even as contraction continued for second month in a row. The IHS Markit India Services Business Activity Index was 12.6 in May, up from April’s historic low of 5.4. The business activity in the sector fell in May as the unfavourable economic effects of the coronavirus pandemic impaired business operations, restricted consumer footfall and led demand to collapse, IHS Markit India Services Purchasing Managers’ Index showed. The business activity index stood at 12.6 in May. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
“Service sector activity in India is still effectively on hold, latest PMI data suggests, as output fell at an extreme rate once again during May,” IHS Markit report said.
“Although the headline figure rose from April’s unprecedented low of 5.4, it remained at a level which, prior to the coronavirus pandemic, was unparalleled in over 14 years of data collection and pointed to an extreme drop in services activity across India,” it added.
India’s manufacturing PMI contracted sharply for the second month in a row in May. The slump in India’s factory activity continued as coronavirus lockdown negatively impacted demand. The fresh orders with producers continued to decline after April’s record contraction, leading companies to cut jobs at a quick pace. The manufacturing PMI, however, marginally increased from 27.4 in April to 30.8 in May amid partial easing of lockdown restrictions.
The Composite PMI Output Index, which measures combined services and manufacturing output, also signalled a further severe contraction in private sector business activity during May. Standing at 14.8, from 7.2 in April, the latest reading was consistent with a decline in output which was unparalleled prior to the COVID-19 outbreak, the survey said. “With economic output set to fall enormously in the first half of 2020, it is clear that the recovery to pre-COVID-19 levels of gross domestic product (GDP) is going to be very slow”, the report noted.
Source: Business Today