Services sector activities contract sharply in May; firms cut jobs: Survey
New Delhi: India's service sector activities declined sharply in May as the coronavirus pandemic continued to impair business operations, restrict consumer footfall at shops and resulted in job losses, a monthly survey said on Wednesday.
Reflecting a fall in output at an "extreme rate once again", the IHS Markit India Services Business Activity Index stood at 12.6 in May.
Although the headline figure rose from April's unprecedented low of 5.4, the score 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, the survey noted.
A print above 50 means expansion and a score below that denotes contraction, as per the IHS Markit India Services Purchasing Managers' Index (PMI).
According to the survey, output sank sharply due to extended business shutdowns and very weak demand conditions.
"Service sector activity in India is still effectively on hold, latest PMI data suggest, as output fell at an extreme rate once again during May," Joe Hayes, Economist at IHS Markit said.
Hayes noted that demand for services, both domestically and overseas, continued to plummet in May as clients' businesses remained closed and footfall was drastically below normal levels.
Employment continued to fall in response to weak demand and expectations of further challenging conditions, the survey said.
The Composite PMI Output Index, which measures combined services and manufacturing output, also signalled a severe contraction in private sector business activity in May.
The score, which was at 14.8 compared to 7.2 in April, was consistent with a decline in output which was unparalleled prior to the COVID-19 outbreak, the survey said.
Hayes said that 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.
India was already in the midst of a protracted economic slowdown before the virus hit due to a festering crisis among shadow lenders and declining consumer demand and private investment. Its GDP grew by 4.2 per cent in 2019-20, the slowest pace in 11 years.
On Monday, Moody's Investors Service downgraded India to the lowest investment grade level and kept it on negative watch, largely because the country faces a prolonged period of slower growth relative to its potential and rising debt levels.
Moody's Investors Service, S&P Global Ratings and Fitch Ratings are predicting the first contraction in GDP for India in over four decades and a fiscal deficit blowout following COVID-19 disruptions.
Meanwhile, on Tuesday, Prime Minister Narendra Modi asserted that India will tide over the coronavirus pandemic and will get back on track with the government's decisive policies.
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Election results 2024: High stakes battle in Maharashtra, Jharkhand as evm’s open today
Mumbai: The stage is set for the high-stakes Maharashtra and Jharkhand assembly elections, as the results will start trickling in from 8 am.
In Maharashtra, the 288-seat assembly contest pitted the ruling BJP-led Mahayuti alliance against the opposition Maha Vikas Aghadi (MVA). The Mahayuti, comprising the BJP, Eknath Shinde-led Shiv Sena faction, and Ajit Pawar’s NCP (Nationalist Congress Party) group, is eyeing a commanding victory, as suggested by most exit polls. The MVA alliance—comprising the Congress, Uddhav Thackeray’s Shiv Sena (UBT), and Sharad Pawar’s NCP is trying to reclaim the state.
Meanwhile, in Jharkhand, the contest for the 81-seat assembly sees the ruling Jharkhand Mukti Morcha (JMM)-led INDIA bloc vying for a second term against the Bharatiya Janata Party (BJP)-led NDA. Chief Minister Hemant Soren’s JMM, along with allies Congress and RJD, faces a stiff challenge from the BJP, AJSU, and smaller partners. With exit polls giving mixed predictions, ranging from an NDA edge to a potential hung assembly.
Additionally, bypoll results in 15 assembly constituencies across states like Uttar Pradesh, Punjab, Kerala, and Uttarakhand will also be announced today.
