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Service sector loses momentum in June, shows index
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SME Times News Bureau | 03 Jul, 2020
De-growth of India's service sector decelerated in June, a macro-economic survey report showed on Friday.
Consequently,
the de-growth rate of India's overall business activity which includes
the output of both services and manufacturing sectors also slowed.
In
terms of index reading, the IHS Markit India Services Business Activity
Index recorded 33.7 in June from May's unprecedented low of 12.6, but
remained below the neutral 50 mark for a fourth successive month,
signalling another decline in service sector output.
"Although
the downturn lost further momentum in June, it remained excessively
strong as the Covid-19 pandemic curtailed intakes of new work and
disrupted business operations," the survey report said.
"The
slower rate of decline was reflective of some stabilisation in activity
levels, with around 59 per cent of firms reporting no change in output
since May. Meanwhile, only 4 per cent registered growth, while 37 per
cent recorded a reduction."
Accordingly, the Composite PMI Output
Index, which measures combined services and manufacturing output, rose
to 37.8 in June, up from 14.8 in May but was still below the crucial 50
level which separates growth from contraction.
"Overall, the
latest data signalled a further steep, albeit considerably slower rate
of decline in private sector activity. Both manufacturing and service
sector output fell when compared to May, although rates of decline
differed vastly," the report said.
"While manufacturing
production fell moderately, edging closer to stabilisation, services
activity continued to decrease substantially."
Besides, the
report pointed out that demand conditions facing both sectors remained
subdued in June, although, as was the case with output, the service
sector observed the stronger reduction in orders.
Resultantly, there was a broad-based decline in employment.
Commenting
on the latest survey results, Joe Hayes, Economist at IHS Markit, said:
"India's service sector continued to struggle in June as the country's
coronavirus crisis worsened. Simply put, the country is gripped in an
unprecedented economic downturn which is certainly going to spill over
into the second half of this year unless the infection rate can be
brought under control."
"Some companies have seen activity
stabilise, but this is most likely just reflecting closures and
temporary suspensions. While this will have contributed to a rise in the
PMI figures, this certainly isn't a promising sign. A large fraction of
the survey panel are still reporting falling activity and order book
volumes, reflecting an intensely challenging domestic picture in India."
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
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64.50 |
UK Pound
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87.50
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84.65 |
Euro
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78.25
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75.65 |
Japanese
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56.85 |
As on 13 Aug, 2022 |
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