The first time since May 2018, India’s services sector activity contracted in the month of June, as weak sales, competitive pressures and unfavourable taxation all hampered output. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 49.6 in June from 50.2 in May. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services – fell to 50.8 in June as against 51.7 in May.
The survey found that new business rose only fractionally during June, with the respective index posting at a nine-month low. Some firms secured new work amid successful advertising, while others saw order books shrink due to competitive pressures and weak underlying demand. Besides, unfinished business continued to rise in June, due to delayed client payments.
The report also noted that operating expenses rose among service providers, on account of higher prices for cosmetics, fuel, gold, meat and vegetables. The overall rate of input cost inflation was negligible and below the average over the survey history, despite accelerating from May's 28-month low. Still, the latest uptick in cost burdens was sufficient to drive another round of upward revisions to selling prices.