GST, low demand drag services output: PMI

According to the seasonally adjusted Nikkei India Services PMI Business Activity Index, the imposition of the Goods and Services Tax (GST) along with weak demand led to the deterioration in business sentiment. The seasonally adjusted index registered a lower rate of expansion at 45.9 in July, down from June’s 53.1. An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease. The lower Services PMI coupled with a subdued Nikkei India Manufacturing PMI led to an overall decline in India’s private sector’s output. 

Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index fell sharply from 52.7 in June to 46 in July. “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,” said Pollyanna De Lima, economist at IHS Markit and the author of the report.