Indian services activity of June shrinks at the fastest rate in 11-months: Current Affairs Special Series

Team Adda247 and BankersAdda are here with a Current Affairs Special Series. In this series, candidates will be introduced to current affairs topics daily, which will not only improve their general awareness but also will ensure that the candidates do not lack in any current affairs topic. Today’s Current Affairs topic is- Indian services activity of June shrinks at the fastest rate in 11-months.

Indian services activity of June shrinks at the fastest rate in 11-months

Activity in the Indian service sector has shrunk sharply in June as the country has seen tighter restrictions to contain a resurgence of covid-19 cases, which hammered demand and forced firms to limit or drop jobs with immediate effect. 

Asia’s third-largest economy has seen a long pause or trouble amid the Covid-19 second wave. PMI data for June showed us faster declines in new business, output and employment that were sharp but much soften than those recorded in the first lockdown. Muted demand plunged the new business sub-index to its lowest since July 2020. The job crisis may worsen over the coming year showed in a Reuters’s poll. The depressed services sector results are in line with the overall downturn in business activity, underscored by a sister survey which showed manufacturing activity contracted for the first time in almost a year in June. 

Input prices have gone up again last month on high raw material and transportation costs, indicating inflation could stay above the Reserve Bank of India’s comfort range of 2-6% in May to a six-month high. Yet the RBI has not been expected to tighten monetary policy this fiscal year as it looks to support economic growth. 

In IHS Markit’s Services purchasing manager’s index plunged to 41.2 last month from an already depressed 46.4 in May that was its lowest reading since July 2020 and well below the 50-level separating growth from contraction. The shrinkage in both manufacturing and services activity sent the overall composite index plunging to 43.1 in June from 48.1 in May.