India’s Services Sector Improves After World’s Worst Showing
(Bloomberg) -- India's services sector activity picked up slightly in May, signaling the reopening of Asia's third-largest economy after a more than two-month lockdown to contain the coronavirus.
The nation's main services index rose to 12.6 last month, data published by IHS Markit showed Wednesday. That's up from 5.4 in April, the world's lowest reading, but still below the 50 mark that indicates contraction in activity.
The services sector accounts for more than half of India's economy, and the latest data reinforce expectations that India's gross domestic product is set for its steepest contraction ever this year.
“Given the stringency of the lockdown measures imposed in India, it is no surprise to see the severity of the declines in April and May,” said Joe Hayes, an economist at IHS Markit. “With economic output set to fall enormously in the first half of 2020, it is clear that the recovery to pre-COVID-19 levels of GDP is going to be very slow.“
India has been under a stringent nationwide lockdown since late March, even though some restrictions were eased beginning April 20 to allow select industries to resume operations. The government will begin a phased lifting of the curbs from June 8, allowing shopping malls, restaurants and places of worship to reopen in areas where virus infections are under control.
Economic growth slowed to 3.1% in the January to March period from a year earlier, but most economists expect a downward revision to those numbers in the coming months.
A purchasing managers survey for the manufacturing sector earlier showed the index rose to 30.8 in May from 27.4 in April, still within contraction territory. As a result, the composite PMI index was at 14.8 in May versus 7.2 a month before.
©2020 Bloomberg L.P.
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