India’s services sector slump stretched into May: PMI

India’s services sector slump stretched into May: PMI

© Reuters. Outbreak of coronavirus disease (COVID-19) in in Mumbai

By Vivek Mishra

BENGALURU (Reuters) – India’s enormous services industry endured another month of devastating contraction in May as the coronavirus brought activity to a near halt, causing steep job losses and cementing fears of a deep recession, a survey showed on Wednesday.

Although the Nikkei/IHS Markit Services Purchasing Managers’ Index crawled up to 12.6 in May from April’s all-time low of 5.4 it remained a long way from the 50-mark separating growth from contraction. It was just below 50 in March.

The last time it contracted for three consecutive months was from November 2016 following the ban of high-value currency notes, which severely hurt consumption.

The lockdown of India’s 1.3 billion people, which started on March 25, has been extended in some areas until the end of June as domestic coronavirus cases reported approached 200,000 with more than 5,500 deaths recorded.

“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, said in a release.

“Demand for services, both domestically and overseas, continued to plummet in May as clients’ businesses remained closed and footfall remains drastically below normal levels.”

Although slightly improved from April sub-indexes tracking domestic and foreign demand remained perilously close to zero, leading firms to reduce their workforce at the second sharpest pace since the survey began late 2005. It has only been faster in April.

The outlook gave little hope for an imminent turnaround with firms reporting record low levels of confidence about the next 12 months.

A composite PMI, which includes manufacturing and services, also signalled a severe contraction in Asia’s third-largest economy. [ECILT/IN]

“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 GDP is going to be very slow,” IHS Markit’s Hayes wrote.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Latest Category Posts