The IHS Markit Services Purchasing Managers’ Index plunged to 5.4 in April from 49.3 in March, an unprecedented contraction since the survey first began over 14 years ago.
“The Indian services economy posted its worst ever month-on-month drop in business activity during April. The extreme slide in the headline index, which fell by over 40 points, shows us that the strict lockdown measures have led to the sector essentially grinding to a complete standstill,” said Joe Hayes, an economist at IHS Markit.
Highlighting that the economic damage of the Covid-19 pandemic has so far been ”deep and far-reaching” in India, Hayes said: “Historical comparisons with GDP data suggest that India’s economy contracted at an annual rate of 15% in April.”
Last month’s data were collected from April 7-28. India’s nationwide 21-day lockdown, which was imposed on March 25 to combat the Covid-19 threat, was first extended to May 3 and again till May 17.
While the rate of job shedding was a survey record, approximately 90% of respondents reported unchanged workforce numbers.
Further, expectations towards future output slumped for a second successive month to their weakest since December 2015.
As per the survey report, the index measuring foreign demand for services ceased to an unprecedented 0.0, while an overall demand index also fell to a record low.
A sister survey on Monday had showed factory activity contracted at its sharpest rate ever.
Put together with services activity, the composite PMI sank to an all-time low of 7.2 last month from March’s 50.6.
However, Hayes said, the hope is that the economy has endured the worst and things will begin to improve as lockdown measures are gradually lifted.