India Service Sector Endures Further Losses In June

India services firms endured further losses of new business as the emergence of the pandemic and the reintroduction of containment measures restricted demand. New work intakes and output contracted at the fastest rates since July 2020, which prompted companies to reduce employment again. Business sentiment took another hit, with panellists neutral in their assessments of output forecasts for the year ahead.

Registering 41.2 in June, the seasonally adjusted India Services Business Activity Index highlighted a further contraction in output. Moreover, falling from 46.4 in May, the latest reading pointed to the fastest rate of reduction since July 2020. Monitored companies commonly indicated that the intensification of the COVID-19 crisis and tight restrictions curbed demand for services.

Subdued demand conditions resulted in a second successive monthly drop in new business received by services firms. The pace of contraction was sharp and the quickest since July 2020. Business activity and new orders decreased in four out of the five broad areas of the service economy, with the fastest rates of contraction registered in Consumer Services. Transport & Storage was the only segment to post growth.

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