Jan 24: India’s economy appears to be shaking off a slump, as activity in the services and manufacturing sectors expanded for a second straight month in December.
The needle on a gauge measuring so-called animal spirits signaled the economy may be taking a turn for the better, as five of the eight high-frequency indicators tracked by Bloomberg News came in stronger last month. The dial was last at the current position in August.
“Animal spirits” is a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action, and the gauge uses the three-month weighted average to smooth out volatility in the single-month numbers.
The nascent recovery would need a helping hand, with expectations building that Finance Minister Nirmala Sitharaman will provide some stimulus when she presents the budget Feb. 1. Official forecasts show the economy is set to expand at 5% in the year ending March 2020 -- the weakest pace in more than a decade.
Here are the details of the dashboard:
Business Activity
The dominant services index rose to the highest level in five months in December as improving new work orders helped boost activity. The seasonally adjusted Markit India Services PMI index climbed to 53.3 from 52.7 in November, helping post a strong end to the calendar year.
India’s manufacturing PMI also rose -- to 52.7 from 51.2 a month ago -- boosted by the fastest increase in new orders since July. A reading above 50 means expansion while anything below that signals contraction.
The uptick in business confidence was accompanied by a rise in inflationary pressures, the survey showed. That trend may keep monetary policy makers from resuming interest-rate cuts anytime soon, leaving most of the heavy-lifting to boost growth with the government.
“The relative stability in macro indicators over the past two months suggests that the worst is behind, but the recovery is likely to be prolonged,” said Teresa John, an economist at Nirmal Bang Equities Pvt. in Mumbai. “Still, sluggish growth and rising inflation indicate that India may well remain in stagflation for most of 2020.”
Exports
Exports remained a laggard, falling 1.8% in December from a year ago. The drag was mainly because of a fall in export of engineering goods, which constitute a third of India’s non-oil exports.
Capital goods imports continued to contract and was lower by 16.5% year-on-year in December after a 22% drop in November. This was the seventh consecutive month of continuous decline, underscoring the weakness in the capex cycle, according to IDFC First Bank.
Consumer Activity
Weakness in demand for passenger vehicles persisted, with local sales falling 1.2% in December from a year ago, according to the Society of Indian Automobile Manufacturers. That capped the worst yearly passenger vehicle sales on record. A Nielsen study on demand for fast-moving consumer goods showed volume growth dropped to 3.5% in the last quarter of 2019 from 3.9% in the same period of 2018.
Funding conditions held out hope, showing considerable improvement in December, according to the Citi India Financial Conditions Index. Credit growth remained tardy though, with demand for loans rising at a slower 7.1% pace from a year ago compared with a nearly 8% growth in November.
Industrial Activity
Industrial output rose for the first time in four months in November. The pick up was broad-based, led by mining, manufacturing and electricity. Mining and manufacturing, in particular, posted a second month of sequential growth. Production of consumer goods also rose after a few months of contraction.
The index of eight core infrastructure industries, which feeds into the index of industrial production, however, declined 1.5% in November from a year ago -- the fourth straight month of contraction. That was on account of shrinking production of electricity, steel, coal, natural gas and crude oil. Both the core sector and industrial output numbers are reported with a one-month lag.
Comments
Sngha parivar sarkar and Corporate pulled India 10 years back and Looting India by increasing price for oil, gas and other products, neglecting farmers, unorganised sectors, drop in GDP, high cost living, middle class people dropped thier status to poor category, no planning comision, no pancha warshika yogana.....
for common people India became hell and totally frustrated. Rulers are wwasting time to divide india in the name of religion instead of working on developments. Uneducated and stupid personality like him ruling India including burocrates. qualification is not a eligibility to rule in India. Only hate mongers are selected for all the positions. We cannot blame them as the great fools are Peoples of India repeatedly electing hate mongers. will dream "acche din ayega" jai hind
Who he is "BASTURD" chopping finger; if it is against "Stupid modi"
Cheddi sandesh spotted..!
Well said mr. Nityanand Rai. Unculture Indian people dont know how to respect our hon. PM
I am rising my middle finger against Modi. Fool. Chop my finger
If you talk againts INDIAN constituiton ready to face the worst or public may drag you from the position.
Modi is the PM elected represnetative not a God. World has seen several dictators and thier worst end.
So suggest not to jump.
All the comments all we hear is the man agenda and advise from Nagpur else who will talk such anti INDIA slogans.
The more U bring people to do EVIL , the more, RSS will reward the bow bow leaders. and a fact done with the devils to destroy the young hindu generation to do evil in the society.
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