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India’s service sector sees extreme slide in business activity once again in May
Jun-03-2020
India’s service sector saw extreme slide in business activity once again in the month of May, as the unfavourable economic effects of the coronavirus disease 2019 pandemic impaired business operations, restricted consumer footfall and led demand to collapse. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index was at 12.6 in May from 5.4 in April. The latest reading pointed to another substantial decline in the health of the Indian service sector, albeit one that was slightly softer than recorded in April. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - was at 14.8 in May from 7.2 in April.
 
The report also noted that output sank sharply due to extended business shutdowns and very weak demand conditions, while new business from overseas markets collapsed on an unprecedented scale once again during May. With many businesses remaining shut down during May, the extent to which spare capacity grew slowed markedly as a number of firms reported a build-up in unfinished work due to idle operations. Nevertheless, backlogs of work declined overall.
 
Further, prices data showed deflationary trends across both input costs and output charges midway through the second quarter. However, while the rate at which output price fell slowed, operating expenses dropped at the fastest rate in the survey history. Besides, aggregate employment fell further during May, although a weaker decline at services companies contrasted with a steeper drop at goods producers.
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