Service Sector Slowdown : The performance of the service sector in the country has also been slow in the month of July. Although it has increased slightly compared to the month of June, but so far it has not reached 50 on the service PMI of IHS Market. In the month of June, the Services PMI was at 41.2 but in July it has increased to 45.4. This is the third consecutive month when the service sector is showing a decline. A score below 50 on the PMI indicates a decline in activity in the sector.
The service sector is unable to recover from the impact of Corona
After the first wave of Corona, there was a huge decline in the service sector of the economy and it almost came to a standstill. After this it showed some momentum, but due to the lockdown imposed in different states to prevent the second wave, the activities started in the hotel, restaurant, aviation and tourism sectors came to a halt. This has dealt a huge blow to the service sector. This has raised the possibility of a sharp decline in GDP as the share of the service sector in the Indian economy has reached about 54 percent.
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Huge cut in jobs in the service sector
There was a huge drop in the demand for the service sector in June. Poliana de Lima, economics associate director at IHS Markit, said that COVID-19 has had a profound effect on the performance of the service sector. The data for the month of July has also been disappointing. During the last one month, there is a decline in new business and output. However, the pace of decline has slowed down a bit. Due to low demand and the possibility of weakness in it, companies in the services sector have cut jobs. It has become clear from this that there is a lot of delay in coming to the pre-corona situation in terms of employment. Along with this, there are other problems in front of the service sector. There has also been a sharp increase in costs in the last month. It has seen the fastest pace in the last eight months. The effect of rising inflation is that there is no possibility of any change from the RBI interest rates.