The service sector has been seeing a facelift in India during another month after the lockdown, i.e. September 2020. The Unlock 5.0 has removed the impositions of government on different business units and has been encouraging tourism. However, the negative impact of increasing COVID-19 cases is not negligible.
The Purchasing Managers’ Index (PMI) for services has risen to 49.8 in September from 41.8 in August. This rise has brought confidence to the service providers and hinted growth prospects in the coming months. The hope of getting COVID-19 vaccine has made companies take an optimistic outlook on the market and plan their business activities for the following year positively.
It is noteworthy that the service activities saw the daylight in September 2020. The manufacturers completed this rise with a sharp increase in the production that is considered the highest in the past 13 years.
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The Composite PMI Output Index rose from 46.0 in August to 54.6 in September; this rise hints at the phenomenal growth across the private sector economy. Similarly, a renewed increase in the new orders also was noted for the first time since February 2020.
Industry experts state that the relaxation in lockdown rules has helped the service sector to recover from the stage of sinking deep. The output of the private sector was expanded to this extent for the first time in September over the past six months. Policymakers are leaving a sigh of relief since this is good news following the economic contraction of 23.9% in the first quarter of the year.
On the other hand, the sector is yet to completely recover as stated from the number of new work orders and employment observed in the month. While the decline in work orders have forced many firms to reduce the workforce, some other firms could not find suitable candidates to fill up their vacancies. Meanwhile, it is believed that the hiring process will continue to be active in the near-term, provided that candidates are ready to relocate to other cities for the sake of employment during these tough times.
For any clarifications/feedback on the topic, please contact the writer at apoorva.n@cleartax.in
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