Covid impact: Services sector contracts for third month

NEW DELHI: India’s services sector is yet to recover from the aftershocks of second Covid wave, contracting for the third month in a row in July, with fresh job losses for the eighth month in a row.The Purchasing Managers’ Index (PMI) stood at 45.4 in the month, marginally better than the 41.2 recorded in June but still in contraction zone. In PMI parlance, index below 50 depicts contraction.

Consumer services were the worst-affected during the month under review, thus depicting that the resumption of contact-sensitive activity is yet to happen. Transport and warehouse were the only sectors to see higher sales in the past month.Also, as the fear of third wave is looming large, for the first time in a year, services firms had a pessimistic outlook for the coming 12-month period, driven by worries about the Covid-19 pandemic, inflation and profit margins.

“In line with sustained falls in new work, there was a further reduction in service sector jobs during July. Employment contracted for the eighth consecutive month, albeit at a moderate pace that was slower than that seen in June,” IHS Markit said in its statement. This is in contrast with the manufacturing sector growth, which witnessed a rebound in July.