India's Services Activity In August Failed To Gather Pace

Activity in India's services sector contracted for the sixth straight month in August as restrictions related to the coronavirus pandemic have continued to hurt business operations and demand. The Nikkei/IHS Markit Services Purchasing Managers' Index (PMI) released on Thursday showed improvement but the reading remained in the contraction zone.

As per the industry survey, PMI for the service sector for August was at 41.8, from July's 34.2, still lower than the 50-mark separating growth from contraction.

It is also the sixth straight month that the index has remained below the 50-mark, the longest stretch since a 10-month run to April 2014.

"August highlights another month of challenging operating conditions in the Indian services sector," Shreeya Patel, an economist at IHS Markit, said in a release.

"Sustained periods of closure and ongoing lockdown restrictions in both domestic and foreign markets have weighed heavily on the health of the industry."

For September, in hopes to repair economic damage, the government has permitted planned reopening of train networks, including metro lines, allow sports events, religious celebrations, with certain restrictions, despite a skyrocketing number of infections in the country.

However, experts believe that easing restrictions may not help revive the service sector as an increase in the number of cases have caused millions of people to avoid entertainment and other social activities like visiting the mall, eating at a restaurant, watching movies in cinema halls, etc.

A composite index, which measures both services and factory activity, improved to 46.0 in August from July's 37.2, cushioned by a better manufacturing performance, but remained well below the neutral 50.0 level.