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
First of all, Hindu religion is recognized fro AHIMSA non voilant - Which was proven by our Father Of Nation Mahtma Gandhi. Who spent his whole life for the sake of all INDIANS and not or his self benifit. Only because of his daring step and policy all patriot Indians united and fought for the Independnece wiht out any cast adn colour discrepnacy.
The group supported the british behind the screen and with in short perod of our independence assasinated
the mahtma and now talking ablut Hindu religion by regularly holding a lathi is not the sign of HINDU religion. In Hindu religion all are with ONE status adn there is no upper and lower cast. All human created by ONE god. Then how come there is upper cast brhamin. Why these rss terrorists omit cast poison all over India. This fellow bhagawath and his terrorist group as no rght to talk abuot hindu religion. Shortly rss is ONLY the enemy of Hindu and Hindustan.
All must boycot and kick vanish them from our graeat India.
Jai Hind !
The people who worship IDOL will directly go to Hell forever there is no second chance in this..
people must think who created idol first, its a man made item which you cannot bow down.
now in india many babas takes advantage of it, even politician
GOD says clearly there is no image of him, he is supreme and we cant see him bcoz our eye dont have capability.
This ch**iya man talks about patrotism, they are the people who are slave of british when people of real indian fighting for freedom.
patriotism does not comes by ugly mouth, this shoul come from action when it need for our country.
dont ever belive these marons will fight to defend india when it need.
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