Services PMI declines at its quickest pace in four years, Nikkei says
Output and new orders fall for first time since January...
...and at fastest rates for almost four years
Charge inflation at 53-month peak
India's Services PMI Business Activity Index declined in July 2017 as Goods and Services Tax (GST) came in to force, Nikkei said on Thursday.
IHS Markit, in a statement, said, "Output and new work declined for the first time since January, with rates of reduction the quickest since September 2013. This had an adverse effect on the labour market, with employment contracting over the month."
The seasonally adjusted Nikkei India Services PMI Business Activity Index plunged from June’s eight-month high of 53.1 to 45.9 in July, its lowest level since September 2013. The headline figure signalled the first downturn in output since the start of the year, and one that was marked.
Pollyanna De Lima, Principal Economist at IHS Markit, and author of the report, said, “PMI data for July highlight a reversal in fortunes across India, with the economy going into reverse mode after seeing a pick-up in growth momentum during June."
The report said, "The launch of the GST was mentioned by services firms as having caused a contraction in new work, leading to lower activity. The drop in new business inflows echoed the trend for output, being the first since January and the most pronounced in nearly four years. Likewise, factory orders decreased in July and at the quickest pace since February 2009."
"Most of the contraction was attributed to the implementation of the goods & services tax and the confusion it caused. Whereas many will question how deep an impact the GST will have on the economy in the near- and long-term, firms seem convinced that prospects will brighten as the new tax regime becomes clearer," De Lima said.
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