India’s services sector is stuck in contraction territory for the third straight month, as business activity, new orders and employment decreased more due to the Covid-19 pandemic. The India Services Business Activity Index raised from 41.2 in June to 45.4 in July.

“The current Covid-19 conditions continued to put some weight on the performance of the service sector, which is crucial for the economy. July data was slightly disappointing, with new business and output falling in a month. Still, there was at least a slowdown in rates of contraction,” Pollyanna De Lima, Economics Associate Director at IHS Markit, said.

There was a further decline in service sector jobs during July. Employment decreased for the 8th consecutive month, even though a steady movement was seen in June. At the same time, the July data showed a 3rd straight decline in Indian private sector activity. The Composite PMI Output Index increased from 43.1 in June to 49.2 in July but remained in the contraction territory.

Survey participants paid higher prices for various items like fuel, medical equipment and raw materials. The overall rate of inflation rose from June and outpaced its long-run average. Output charges also rose at a faster pace in July.