Dip in India’s services sector May activity
As the coronavirus brought activity to a near standstill, India’s enormous services industry endured devastating contraction in May. On the brighter side though, the Nikkei/IHS Markit Services Purchasing Managers’ Index crawled up to 12.6 in May from April’s all-time low of 5.4. This, however is still quite far away from the 50-mark separating growth from contraction, and has cementing fears of a deep recession.
“Given the stringency of the lockdown measures imposed in India, it is no surprise to see the severity of the declines in April and May,” Joe Hayes, an economist at IHS Markit, noted in a release. It was observed that as clients’ businesses remained closed and footfall remains drastically below normal levels, demand – domestic and international – for services dropped.
The last time when the sector’s performance contracted for three consecutive months was from November 2016 following the ban of high-value currency notes. The study isn’t as optimistic about an imminent turnaround with firms reporting record low levels of confidence about the next 12 months.