GST Impacting India Services PMI

The Nikkei India services purchasing managers’ index rose to 47.5 in August from July’s 45.9. The latest figure shows the Indian services sector was again impacted by the goods and services tax introduced in July, Bloomberg reported. “While July’s downturn in the goods-producing industry proved to be a temporary blip, services remained trapped in contraction,” said Pollyanna De Lima, a principal economist at IHS Markit, which compiles the PMI survey. “Businesses are holding back on investment, leading to falls in employment. At the same time, input costs are increasing and firms are unable to fully pass these on due to competitive pressures. It’s not all doom and gloom, however, as activity, new business and employment showed much slower rates of reduction than those noted in the prior survey period.” A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction.