Resurgence in coronavirus infections: Services sector in India loses steam in December

"It is clear that the early part of 2021 will continue to be challenging and we're looking at a sustainable recovery and some return to normality once Covid-19 vaccines become available."

On Sunday India approved two coronavirus vaccines for emergency use but it could take years to vaccinate over 1.3 billion people.

Although a sub-index monitoring overall demand ended a rough 2020 in growth territory, it declined to a three-month low as night curfews in some major cities depressed demand.

Demand from abroad remained firmly in contraction territory as many countries reimposed lockdown measures to contain a fresh spike in Covid-19 cases.

Meanwhile, job market conditions darkened, slipping back into contraction, although the pace of job shedding remained minimal.

"Given the damaging impact of the pandemic on the service economy, some companies are facing financial difficulties, which is preventing staff hiring. December saw the ninth round of job shedding in ten months," the report added.

Optimism about the next 12 months faded at the end of the year as firms were concerned about the uncertainty surrounding the pandemic, the rupee's depreciation and rising inflationary pressures, the survey showed.Despite a pick-up in factory activity, sluggish demand for services meant the India composite PMI fell to a three-month low of 54.9.