April Services PMI Improves

Contraction in services sector continued for the 10th straight month in April due to a difficult economic environment combined with the impact of long-drawn elections and a further drop in new orders. The HSBC Services Purchasing Managers’ Index (PMI) rose to 48.5 in April from 47.5 in the previous month, marking a marginal recovery within overall contraction. A reading of less than 50 on this survey-based index that gauges activity in the services sector indicates contraction. While the Business Activity Index improved, it remained below the waterline. This points to still subdued service sector activity. India’s services sector contributes nearly 60% to the gross domestic product, but has been facing a slowdown for the past few quarters as investment activity has slowed and manufacturing contracted.