India's Services Activity Contracts For The Fifth Straight Month In July

For the fifth straight month, India's service sector shrank as the coronavirus pandemic hurt business activity. The Nikkei/IHS Services Purchasing Managers' Index (PMI) released on Wednesday rose to 34.2 in July when compared to 33.7 in June, however, it was still well below the 50-mark.

A PMI reading above 50 means expansion and below the level means a contraction in economic activity. July was the fifth straight month the index was sub-50, the longest such stretch since a 10-month run to April 2014.

"The coronavirus pandemic and subsequent introduction of lockdown measures continued to weigh heavily on the Indian service sector in July. Business activity and new orders dropped again, with the rates of decline remaining rapid overall," said Lewis Cooper, an economist at IHS Markit, in a release.

"Panellists frequently reported temporary company closures and weak demand as a result of the pandemic."

Although slightly improved from June, sub-indexes tracking domestic and foreign demand remained firmly in contraction territory even though firms cut prices despite an uptick in input costs.

Meanwhile, firms remained pessimistic about the next 12 months and cut jobs at the fastest pace on record.

"With such a prolonged and significant downturn, any substantial recovery will take many months, if not years," IHS Markit's Cooper added.

A composite PMI, which includes manufacturing and services, suggested an ongoing deep contraction in Asia's third-largest economy, falling to 37.2 from June's 37.8.