NEW DELHI: Activity in India’s dominant services sector contracted sharply in June as tighter restrictions to contain a resurgence of coronavirus cases hammered demand and forced firms to shed jobs at a rapid clip, a private survey showed on Monday.
Asia’s third largest economy, which has already recorded more than 400,000 COVID-19 deaths, is still reporting over 40,000 coronavirus cases per day, taking the total number of infections to over 30.5 million, report agencies.
“PMI data for June showed quicker declines in new business, output and employment that were sharp but much softer than those recorded in the first lockdown.”
Muted demand sank the new business sub-index to its lowest since July 2020.
As a result, firms shed headcount for a seventh straight month, with the fastest reduction rate recorded in June. A Reuters poll taken around a month ago showed the job crisis may worsen over the coming year.
The depressed services sector results are in line with the overall downturn in business activity, underscored by a sister survey on Thursday which showed manufacturing activity contracted for the first time in almost a year in June.
Input prices rose again last month on high raw material and transportation costs, indicating inflation could stay above the Reserve Bank of India’s comfort range of 2-6 per cent in coming months.