The Nikkei India Service PMI declined to 49.6 in June, down from 50.2 in May, the IHS Markit India Services Business Activity Index posted in contraction territory for the first time since May 2018. According to survey participants, weak sales, competitive pressures and unfavourable taxation all hampered output.
PMI data for India indicated that economic conditions in the service sector weakened, as broadly stagnant sales caused the first drop in business activity in over a year. Although the labour market showed signs of resilience, there was a notable slowdown in job creation. Optimism towards growth prospects was sustained, but confidence was down from May.
New business rose only fractionally during June, with the respective index posting at a nine-month low. Survey evidence indicated that some firms secured new work amid successful advertising, while others saw order books shrink due to competitive pressures and weak underlying demand. International sales increased for the fourth straight month, albeit at the slowest pace in this sequence.
Real Estate & Business Services was the weakest link in June, where a marked drop in new work translated into a faster contraction in output and unchanged employment.
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