The contraction in the services sector continued for the second month in May though it showed a marginal recovery from the previous month as the pandemic impaired business operations, restricted consumer footfall and led to collapse in demand, a survey said on Wednesday.

The IHS Markit India Services Business Activity Index stood at 12.6 in May. Although the headline figure rose from April’s unprecedented low of 5.4, it remained at a level which was not seen in over 14 years of data collection and pointed to an extreme drop in services activity across India, the survey said.

According to the IHS Markit India Services Purchasing Managers’ Index (PMI), a print above 50 means expansion and a score below that denotes contraction.

“Service sector activity in India is still effectively on hold as output fell at an extreme rate once again during May,” Joe Hayes, economist at IHS Markit, said.

Hayes noted that “demand for services, both domestic and overseas, continued to plummet in May as clients’ businesses remained closed and footfall was drastically below normal levels”.

“Many services require social interaction, and the threat of the virus will keep a lid on demand for these businesses. Labour market scarring caused by the lockdown and the finance ministry’s tepid response to the crisis also mean that domestic demand will remain very weak for a long time to come,” Darren Aw, Asia economist of Capital Economics, said.

According to the survey, output sank sharply because of extended business shutdowns and very weak demand conditions.

Meanwhile, employment continued to fall in response to weak demand and apprehensions of further challenging conditions. The Composite PMI Output Index, which measures combined services and manufacturing output, also signalled a severe contraction in private sector business activity during May.