Covid resurgence heavily dented India’s service sector output which contracted last month.

Moreover, the data indicated that India’s service providers struggled in May, with the intensification of the Covid-19 crisis causing renewed declines in new business and output.

Consequently, at 46.4 (index value) in May, down from 54 in April, the seasonally adjusted India Services Business Activity Index was in contraction territory for the first time in eight months.

The seasonally adjusted index reading remained above the critical 50-mark that separates growth from contraction.

“The latest reading pointed to a solid rate of reduction that was nevertheless slower than those seen in the aftermath of the Covid-19 outbreak,” IHS Markit said in the PMI report.

According to panel members, the fall in output stemmed from the escalation of the pandemic and the reintroduction of restrictions.

“Growth of new work intakes ground to a halt in May, with companies noting the first decline in sales since September 2020. Survey participants indicated that demand was dampened by the intensification of the Covid-19 crisis.”

“International demand for Indian services also worsened, with new export business falling at the quickest rate in six months. The drop was attributed to international travel restrictions and business closures.”