India's service sector contracted sharply in June as the emergence of the pandemic and the reintroduction of containment measures restricted demand, survey data from IHS Markit revealed on Monday.
The services Purchasing Managers' Index fell unexpectedly to 41.2 in June from 46.4 in May. Economists had forecast the index to rise to 48.0.
A reading below 50.0 indicates contraction in the sector. The index signaled the fastest pace of contraction in activity since July 2020. Subdued demand conditions resulted in a second successive monthly drop in new business received by services firms. Foreign demand deteriorated further in June, with new export orders falling for the sixteenth consecutive month. In line with falling demand, companies reduced payroll numbers in June.
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