India’s service sector shows improvement in August, PMI rose to 41.8 from 34.2 in July: Monthly survey

The downturn in India’s services sector activity eased significantly in August, a survey by IHS Markit released on Thursday showed. The IHS Markit India Services Purchasing Managers’ Index (PMI) declined to 34.2 in July and rose to 41.8 in August. This is the highest PMI since March before the COVID-19 crisis hit the economy hard.

However, the restrictions due to COVID-19 has adversely affected client demand and business with the service sector activity remaining in the contraction zone for the sixth successive month in August.

“August highlights another month of challenging operating conditions in the Indian services sector. Sustained periods of closure and ongoing lockdown restrictions in both domestic and foreign markets have weighed heavily on the health of the industry,” said Shreeya Patel, Economist at IHS Markit, according to reports from The Indian Express.

The situation seems better than the records in April and May in terms of contraction, but there is an increase in outstanding business induced by the restrictions. the survey said.

“Output and new work continue to fall at solid rates, while restrictions meant that firms were often unable to complete projects. Backlogs of work accumulated to the greatest extent in almost 15 years of data collection,” added Patel.

Job shedding in the service sector due to reduced business and sustained revenue loss causing companies to increase the price is also observed.

“That said, the survey showed signs of a potential recovery. Business sentiment was neutral after being negative in the previous three months and employment fell at the softest pace since March,” Patel said.

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