Service sector: the second largest decline in 14-year history, companies laid off huge layoffs

The country’s services sector recorded the second major historic slowdown in May, due to a steep decline in production and new orders compared to April due to the Kovid-19 epidemic and lockdown. The report released today by IHS Markets says that the Services Business Activity Index recorded 12.6 in May. The IHS market report released on a month-on-month basis shows the index’s decline below 50. The higher the index is below 50, the greater the fall. The level of fifty is the indicator of stability and the index is higher.

The sharpest drop since April this year

According to the report, this is the fastest decline since April this year in the history of 14 years. The index stood at 5.4 in April. The IHS market started collecting data for the services sector 14 years ago. Earlier on 1 June, the manufacturing sector data was released and with that the index fell to 30.8 with a big fall.

Also read: Manufacturing sector’s biggest decline in 15 years, layoffs at record level in May

IHS Markit economist Joe Hedge reacted to the report, saying that both domestic and foreign demand in the services sector remains weak. Demand has come down due to the closure of clients’ business and the historic decline in customer arrivals. Hedge said it would take time for GDP to reach levels before Kovid-19. In the midst of weak demand, companies have been retrenched, although its pace was lower than in April. Amidst all this, business sentiment remained at a historic low for the next one year.