Left Menu
Development News Edition

Services activity contracts sharply in May due to COVID-19, firms cut jobs: PMI

PTI | New Delhi | Updated: 03-06-2020 11:29 IST | Created: 03-06-2020 11:29 IST
Services activity contracts sharply in May due to COVID-19, firms cut jobs: PMI

Business activity across India's service sector fell drastically during May as the unfavourable economic effects of the coronavirus pandemic impaired business operations, restricted consumer footfall and led demand to collapse, a monthly survey said on Wednesday. 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, 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, the survey noted. As per the IHS Markit India Services Purchasing Managers' Index (PMI), a print above 50 means expansion and a score below that denotes contraction.

"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 further 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".

According to the survey, output sank sharply due to extended business shutdowns and very weak demand conditions. Meanwhile, employment continued to fall in response to weak demand and expectations of further challenging conditions.

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.

Hayes 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". 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.

Meanwhile, Moody's Investors Service on Monday 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, Prime Minister Narendra Modi on Tuesday asserted that India will tide over the coronavirus pandemic and will get back on track with the government's decisive policies..



Why COVID-19 is unstoppable in USA despite it being ranked at the top of GHS Index?

Several worst-hit countries such as Italy, France, Spain, the UK, Canada, and Russia have peaked COVID-19 cases in April. Almost all of them have gradually flattened the curve. However, the USA is setting new daily records of infections tha...

COVID-19 seems cooking biggest ever global scam

The increasing number of corruption cases on COVID-19 funds from throughout the world and involvement of high profile persons indicate that the countries cant ignore corruption in their pandemic response programs. This has generated the nee...

Health Management Information Systems lack holistic, integrated, and pandemic resilient character

Being a part of the United Nations system, the World Health Organization WHO deserves its share of rebuke for its alleged failure issue COVID-19 health emergency alerts on appropriate time. However, the pandemic has also exposed loopholes i...

Pride in the time of coronavirus: a welcome move online?

This year is different in many ways not least as celebrations are also taking place against the dramatic backdrop of a global health crisis and a resurgence in grassroots activism following the death of George Floyd in Minneapolis. ...


Latest News

10-feet long King Cobra rescued in Odisha's Ganjam

Forest officials along with members of People for Animals PFA rescued a King Cobra from the premises of Jarada Jagannath Temple of Ganjam district on Monday.After seeing the giant snake, cobra one devotee shouted and informed the temple adm...

Brazil's Bolsonaro catches coronavirus, shrugs off health risks

Brazilian President Jair Bolsonaro said on Tuesday he tested positive for the novel coronavirus after months minimizing the severity of the pandemic and defying medical experts, even as the virus has killed more than 66,000 people in his co...

Pompeo speaks to Freeland, discusses 'shared concerns' about Beijing's 'unjustified detention' of Canadian citizens

US Secretary of State Mike Pompeo on Tuesday local time spoke to Canadian Deputy Prime Minister Chrystia Freeland wherein the two leaders discussed shared concerns about Beijings unjustified detention and charging of Canadian citizens Micha...

Delhi reports over 2,000 new coronavirus cases, 50 deaths

With 2,008 new cases, Delhis coronavirus count touched 1,02,831 on Tuesday.2,129 were recovereddischargedmigrated in the last 24 hours and 50 new deaths were reported in the national capital.According to the Delhi Government, the total numb...

Give Feedback