India’s services activity slowed to a three-month low in April amid an intense second wave of the Covid-19 pandemic even as sentiment towards growth prospects faded. The India Services Business Activity index declined to 54 in April from 54.6 in March. A reading above 50 indicates expansion while a sub-50 figure shows contraction.
“Anecdotal evidence indicated that ongoing growth of new work underpinned the rise in output, which was nevertheless stymied by the intensification of the Covid-19 crisis. The rate of increase in new business matched that seen in March,” IHS Markit said in the survey report. As per the report, Indian services firms were optimistic regarding the 12-month outlook for business activity, but the overall level of positive sentiment fell to the lowest since last October.“The escalation of the pandemic was the main drag on confidence,” it said.
Explaining that localised lockdowns impeded services activity, Rahul Bajoria, chief India economist at Barclays said: “We believe that the economic cost of the current partial lockdowns will be significantly lower than last year, and the extension of movement curbs till end June could cost the economy an estimated $38.4 billion, in our view”. The IHS Markit India Services PMI is compiled from responses to questionnaires sent to a panel of around 400 service sector companies.