New Delhi, Jun 3 (IANS): Unfavourable economic effects of the Covid-19 outbreak heavily dented India's service sector during May.

Consequently, India's overall business activity which includes the output of both services and manufacturing sectors in India remained at historic low levels.

In terms of index reading, the IHS Markit India Services Business Activity Index recorded 12.6 in May from April's unprecedented low of 5.4.

The index reading has remained at a level which, prior to the coronavirus pandemic, was unparalleled in over 14 years of data collection and pointed to an extreme drop in services activity across India.

Accordingly, the Composite PMI Output Index, which measures combined services and manufacturing output, signalled a further severe contraction in private sector business activity during May.

The index posted a reading of 14.8, from 7.2 in April, the latest reading was consistent with a further decline in output which was unparalleled prior to the Covid-19 outbreak.

"Service sector activity in India is still effectively on hold, latest PMI data suggest, as output fell at an extreme rate once again during May. Given t he stringency of the lockdown measures imposed in India, it is no surprise to see the severity of the declines in April and May," said Joe Hayes, Economist at IHS Markit.

"Demand for services, both domestically and overseas, continued to plummet in May as clients' businesses remained closed and footfall remains drastically below normal levels."

"With economic output set to fall enormously in the first half of 2020, it is clear that the recovery to pre-COVID-19 levels of GDP is going to be very slow."