Mecklai Graph of the day: Mixed Economic data points put markets in a Tussle
The trade balance for India has been improving in the recent months, as the deficit seems to be narrowing with the latest data for June coming in at a deficit of $10.3 Billion, the lowest this calendar year. This can be observed on the back of Oil prices taking a plunge, helping us reduce our import payables. Also, industry has been pro use of localized goods against imported commodities, the prices of which get inflated with a depreciating local currency. Both of these help keep a check on Import figures.
Incidentally the HSBC PMI data for India for July was released today as well with a reading of 52.9, down from 55 points for the month of June. This is in line with PMI of most nations, showing a slow down in manufacturing and a sluggish output. This includes most of Euro nations, the U.K and also the dragon nation China. Most nations baring China and India posted PMI points below 50 levels, showing contraction, whereas the two Asian giants have managed to be in the expansion mode, albeit a slowing expansion.
It was in contrast mode to watch two important economic indicators facing at opposite direction, with the trade balance showing a good reduction in deficit, helping the cause of the local currency. Whereas, the PMI Manufacturing shows a slow chugging economy, dangerously close to the subsistence level of the 50 mark. This puts tremendous pressure on future trade balance data points and it would be interesting to see the interaction of future trade balance and PMI.
The below graph shows the Trade Balance and the HSBC PMI from YTD for India.
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