The Composite Purchasing Managers’ Index, which provides a snapshot of private sector activity, shows that the economy continued to weaken in June. The seasonally adjusted IHS Markit India Composite PMI, which includes both the services and manufacturing sectors, came in at 50.8 in June, the lowest level in over a year. The accompanying chart shows the performance of the composite index over the last one year.
The services sector contracted last month. Says the IHS Markit report, ‘At 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.’ A reading below 50 indicates contraction from the previous month.
The manufacturing PMI for June was at 52.1 and the average manufacturing PMI reading for the opening quarter of fiscal year 2019/20 was the lowest recorded since the second quarter of FY18.
The contraction in services is an indication of the home-grown nature of the slowdown. Commenting on the latest survey results, Pollyanna de Lima, Principal Economist at IHS Markit, said: ‘Looking at the opening quarter of fiscal year 2019/20, we see the slowest upturn in private sector output since the last quarter of fiscal year 2017/18, which dragged employment growth down to a notable extent.’
The Budget will tell us what the government’s plans are to get the economy out of the rut in which it is in.
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