Latest survey data pointed to the first fall in order book volumes at Indian service providers since September 2019. Although the drop in demand was modest, it was the sharpest for just over two years. There were widespread reports of new business receipts struggling due to the COVID-19 outbreak, deterring discretionary spending. A number of firms also mentioned lower sales as a result of liquidity issues. Poor conditions in overseas markets led to the sharpest deterioration in foreign demand since exports data were first collected in September 2014. The global COVID-19 pandemic had a far-reaching impact on the ability of firms to source new work intakes from abroad.
Firms responded by reducing their workforces as intakes of new business were insufficient to maintain payroll numbers. That said, input costs rose at the slowest rate in six months as market prices for food and fuel were cut by suppliers.
The Composite PMI Output Index fell to 50.6 in March, down 7 points from February's 57.6 to signal a sharp slowdown in private sector output growth and bringing an abrupt end to the recent strong upward-moving expansion trend. Overall, the index was consistent with a marginal rate of increase in private sector output.