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
if you think muslim killed million, then forget about you,....even you grand grand father never breath in this world. muslim are generous but if you provoke they will hit with full power even if he was alone, not like you people coward you attack in number like dogs
hope the US nukes muslim lands. Islam is responsible for killing millions
we never find Iran by supporting palestinians in their difficult times , only instigate groups like Hamas to keep entire area boil ,
watch situation sunni muslims in Iraq, syria , yeman... do US or Isreil responsible ? even US interfered , who is the benefeciary...
In Yeman entire sea route is controled by US navy , even then weapons are supplied to houthis.... who is supplying weapons weather US or Iran by the help of US navy.... !
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Read history of the their trait before blindly trusting. their statement now is just a political gimmic. if they are so worried about muslims and so powerful and talking about defending Saudi why did they defend palastine why dint they fight israel? why they just watching so many diying muslims children an women and men in palastine where is their power. what we hear nothing bnut lies from them. they will not do anything their aim is to conqer power. Rafida or Rawafid is their name!
Warriors of Muslim? Nonsense. they are killing so many muslims in Yemen, they are the one who started to fight the sunnis and killing them, they have killed many in Algeria, Lebonan using thei terrorism.
Read history of the their trait before blindly trusting. their statement now is just a political gimmic. if they are so worried about muslims and so powerful and talking about defending Saudi why did they defend palastine why dint they fight israel? why they just watching so many diying muslims children an women and men in palastine where is their power. what we hear nothing bnut lies from them. they will not do anything their aim is to conqer power. Rafida or Rawafid is their name!
salute fo the true worrier of muslim, IRAN
you are asking help with american slaves, sorry they are loyal dogs die for them not for muslim brothers.
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