Services sector activity remained weak in August due to the perceived impact of the goods and services tax (GST), a private monthly survey has revealed.

The Nikkei India Services PMI Business Activity Index declined for a second month in a row to 47.5 in August. The pace of decline was however softer compared with 45.9 in July.

A reading above 50 on the index denotes expansion, while the one below the threshold indicates contraction.

“The downturn was often associated with the implementation of the GST, though there were also a mention of shortages of inputs,” Nikkei said in a release on Tuesday.

Despite growth in the manufacturing index, the Nikkei India Composite PMI Output Index stood at 49 in August against 46 in July. However, it remained in the red.

According to the survey, contractions were noted in each of the five services sub-sectors monitored.