Mecklai graph: Manufacturing PMI overtakes Services PMI

Mecklai graph of the day - India PMI

HSBC's business activity index or services PMI, rose to 52.8 in April from 52.3 in March, while yesterday, the bank released manufacturing purchasing managers index which inched up to 54.9 in April, from 54.7 in March, showing a positive move after three months of declines.

The services index has been staying above the 50-mark which separates growth from contraction for six months now, but as seen in the above graph the manufacturing PMI has slowly gradually overtaken the services PMI  suggesting that manufacturing sector is robust but the service sector is on gradual decline.

The decline in services PMI can be attributed to overall global slowdown mainly due to Euro crisis. And with the big IT players like Infosys suggesting weaker guidance for their business it seems the overall decline in PMI services is likely to continue, hence diminishing the overall attractiveness of the Indian economy as an investment destination because service sector contributes more than 60% of India GDP.

The below graph shows the comparison of the India Services & Manufacturing PMI

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