Contraction in services for first time since May’18

According to PMI data, weak sales, competitive pressures and unfavourable taxation that hampered output have led to a contraction in services sector in June’19 for the first time since May’18. The IHS Markit India Composite PMI Output Index, that assesses both the manufacturing and services industry, dropped from 51.7 in May to 50.8 in June — its lowest mark in over a year. “The latest PMI results for India bring some concerns over the sustainability of the relatively robust growth rates seen at the start of the year, and the ability of companies to create jobs,” opined Pollyanna de Lima, Principal Economist at IHS Markit.

Indian service providers, however, are hopeful of an improvement in demand situation. Meanwhile, experts believe that the Reserve Bank of India (RBI) will continue with its dovish stance in its upcoming policy review in August to give an impetus to the slowing economic growth.