05.08.202005:59:00UTC+00India's Service Sector Contracts Sharply Amid Pandemic

India's service sector contracted sharply in July as restrictions imposed to curb the coronavirus disease weighed on activity, survey results from IHS Markit showed Wednesday.

The IHS Markit services Purchasing Managers' Index rose moderately to 34.2 in July from 33.7 in June. However, a score below 50 indicates contraction.

Business activity and new work logged substantial reductions in July as lockdown restrictions stifled demand and forced companies to cease operations.

Subsequently, firms made further cuts to staff numbers, with the rate of job shedding the most marked on record.

Looking ahead, the 12-month outlook for output was negative for a third consecutive month, with fears of a substantial economic downturn common among survey respondents. The survey showed that the composite output index, which measures combined services and manufacturing output, dropped to 37.2 from 37.8 in June. The score indicates a quicker rate of contraction, albeit not as severe as those in April and May.