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No improvement in service sector, further decline in June, mass layoffs continue

With the decline in new orders and weak business sentiment, the services sector activities in the country declined in June compared to May this year and companies continued to retrench the workforce. A report of the Business Activity Index for the services sector was released by IHS Market today. The index released on a month-on-month basis was recorded at 33.7 in June, implying that manufacturing activity declined compared to May. An index lower than 50 indicates a decline over the previous month and an increase above 50, while a score of 50 indicates stability.

There was a steep decline in April compared to March and in May compared to April. In that sense, the decline in June was less than in May. The index was recorded at 5.4 in April and 12.6 in May. The report said that after the historical retrenchment in May, the companies continued retrenchment in June. Companies say they have been laid off due to no work. Some companies also say that there are no employees to work for.

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IHS Markit economist Joe Hedge reacted to the report, saying that with the Corona crisis deepening in the country, the service sector showed difficulties even in June. The country’s economy seems to be heading towards an unprecedented decline. If the rate of infection does not come under control, it will continue to decline in the second half of this calendar year.

The report said that due to the Kovid-19 epidemic, there was a huge decline in new orders and the work of companies has also been affected. 59 percent of the companies surveyed said that there was no improvement in activities in June as compared to May. Another 37 percent said a decline in activities, while the remaining four percent said their activities increased compared to May. There is a significant drop in demand from abroad. Restrictions on international travel have also affected orders from abroad. The confidence of traders regarding the scenario of the next one year has weakened.

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