Service sector

PMI – The New Indian Express

Through PTI

NEW DELHI: India’s service sector business slumped into contractionary territory for the first time in eight months amid further declines in new jobs due to the escalating pandemic and the reintroduction of restrictions , a monthly survey said on Thursday.

India’s seasonally adjusted index of service business activity fell to 46.4 in May from 54.0 in April as the intensification of the COVID-19 crisis caused news to drop further. business and production.

In PMI parlance, a print above 50 signifies expansion while a score below 50 indicates contraction. “The intensification of the COVID-19 crisis and associated restrictions suppressed domestic and international demand for Indian services. Total sales fell for the first time in eight months, while the fall in external orders was the most pronounced since last November,” said Pollyanna De Lima, associate director of economics at IHS Markit.

International demand for Indian services also deteriorated, with new export business falling at the fastest pace in six months. The decline was attributed to restrictions on international travel and business closures. On the employment front, pandemic concerns and falling sales led service companies to cut their workforces again in May.

“As part of efforts to rein in spending amid deteriorating new business, services firms cut payrolls by the largest extent in seven months. Concerns over the outlook, highlighted by a decline sentiment, could impede job creation in the short term,” Lima noted.

On the inflation front, amid reports of higher prices for a wide range of inputs and fuels, operating expenses for service businesses continued to rise in May. “…The overall increase in cost loads has been historically strong as prices for a wide range of inputs and fuel have continued to soar. Only a small proportion of companies have shared cost loads additional costs with their customers, which resulted in only a marginal increase in service fees,” Lima said.

Meanwhile, the composite production PMI, which measures the combined output of services and manufacturing, fell from 55.4 in April to 48.1 in May, indicating a further decline in activity in the sector. private in India.

Overall new orders fell for the first time in nine months and private sector jobs fell for the 15th consecutive month.

On the macro side, India’s economy contracted 7.3% less than expected in the fiscal year ending March 2021 after a rebound in the growth rate in the fourth quarter, just before the world’s worst coronavirus outbreak. coronavirus infections hit the country.

The next Reserve Bank of India (RBI) bi-weekly monetary policy review is expected to be announced on June 4. Experts believe that, with the economic outlook remaining uncertain in light of the lingering pandemic, the RBI’s monetary policy stance is likely to remain accommodative.