India contracts services for the sixth consecutive month, job losses are on the rise

India ‘s services operation shrank in August for the sixth consecutive month, leading to a sharp increase in job losses, according to an industry survey released Thursday. The sharp decline in service production has resulted in the country’s longest reported string of job losses. The Nikkei / IHS Markit Services Purchasing Mangers’ Index rose from the dismal 34.2 in July, to 41.8 in August. It remained well beneath the 50-mark, however, which separates growth from contraction.

Shreeya Patel, an economist at IHS Markit, told Reuters news agent that sustained closure periods and ongoing restrictions on lockdowns in both domestic and foreign markets have weighed heavily on industry health. While the government has now begun to unlock more economic activity, the sharp rise in everyday cases of coronavirus is still a major concern.

The survey also indicated that India’s services sector is likely to remain stagnant for the next 12 months. Even on the price front, both input costs and charged prices rose in August, suggesting that Asia’s third-largest economy could enter a stagflation period — a phase marked by slow growth, unemployment, stagnant demand and high inflation.