India’s service sector activity plummets at historic rate during April

New Delhi [India], May 6 (ANI): India’s service sector recorded its largest month-to-month contractions in business activity and new orders since IHS Markit’s data collection began over 14 years ago in April, according to the latest PMI data.
Measures to stem the spread of coronavirus disease 2019 (COVID-19), such as restrictions on the movement of citizens and business shutdowns, were the key factors causing output and demand to fall at unprecedented rates.
The impact of the global pandemic was particularly striking in export markets, with the entire survey panel registering lower overseas sales.
The IHS Markit India Services Business Activity Index posted 5.4 in April, an extreme decline from 49.3 in March, and indicative of the most severe contraction in services output since records began in December 2005.
According to panellists, activity fell severely as a result of the nationwide lockdown, leading businesses to shut down their operations as demand collapsed.
Nearly 97 per cent of survey respondents observed a reduction in output, highlighting the widespread impact of the COVID-19 pandemic.
Restrictions on movement across India contributed to the steep drop in new orders during April. Demand for services fell at the sharpest rate in over 14 years of data collection. Some panel members mentioned that key clients closing their businesses had also severely hit workloads.
International sales fell across the entire survey panel in April as signalled by the respective index falling to 0.0. According to firms, measures to stem the spread of the virus overseas had caused demand to fall across all key export markets.
The Composite PMI Output Index, which measures combined services and manufacturing output, also sank to a new record low in April. At 7.2, the index fell from 50.6 in March and was indicative of an unprecedented decline in private sector business activity.
The latest reading was the smallest by some margin, eclipsing the previous low seen in February 2009.
“The Indian services economy posted its worst-ever month-on-month drop in business activity during April,” said Joe Hayes, Economist at IHS Markit. “The extreme slide in the headline index, which fell by over 40 points, shows us that the strict lockdown measures have led to the sector essentially grinding to a complete standstill,” he said.
“Historical comparisons with GDP data suggest that India’s economy contracted at an annual rate of 15 per cent in April. It is clear that the economic damage of the COVID-19 pandemic has so far been deep and far-reaching in India, but the hope is that the economy has endured the worst and things will begin to improve as lockdown measures are gradually lifted.”
The IHS Markit India Services PMI is compiled from responses to questionnaires sent to a panel of around 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
The panel is stratified by detailed sector and company workforce size based on contributions to GDP.
IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government. (ANI)