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Wednesday, November 12, 2008

India's Manufacturing Industry Continues To Expand in September

Just following up briefly on my last post, as anticipated by the PMI report India's industrial production growth bounced back again in September. Output at factories, utilities and mines rose 4.8 percent from a year earlier after a revised 1.4 percent gain in August, according to data from the Central Statistical Organization today (Wednesday).

India's factory output rose 4.9 percent in the six months to September from a year earlier, less than half the 9.5 percent pace recorded in 2007, according to today's report.

And the expansion in Indian manufacturing looks set to continue into October according to the latest ABN AMRO Bank purchasing managers' index (PMI) report. The index, which isbased on a survey of 500 companies, slumped to a seasonally adjusted 52.2 in October, its lowest since the survey began in April 2005 and sharply below September's 57.3. A reading above 50 signals expansion while a figure below 50 suggests contraction, and the manufacturing PMIs are interesting, since they do offer us a sort of "real time" snapshot of what is actually happening.


Anonymous said...

As you continue to talk up Indian economy here and also on the useless INDIANECONOMY.ORG blog, things are only getting worse.

I hope you slightly pull over the carpet and see the reality in 2009


Edward Hugh said...

Hello there,

"I hope you slightly pull over the carpet and see the reality in 2009."

Well not really. I think what I already see is some sort of approximation to reality. You are quite right, India (and Brazil for that matter) are having a hard time of it at the moment. But this is as nothing to the problems which (say) Russia and China are having, and I think there are reasons for this, and that economic analysis can help us understand some of those reasons.

Basically no-one is going to escape lightly in 2009, so this is hardly a uniquely Indian phenomenon. The big issue is who will lead the next charge, when one day this long night finally comes to an end. At the top of the list, I think comes India.

I explain some of my reasoning at rather greater length here.

Anyway, the seasons greetings to you, and lets go and see what actually does get to happen in 2009.

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jalamgir said...

What's been the latest on the manufacturing industry? FDI has been declining steadily, and along with it, the political risk of doing business in India has also increased by some estimates.

This second issue will be quite important as elections draw near. Discontent with India's path to globalization has been rising, and with inflation up in 2009, the political management of India's economy will prove crucial to stability. I speak at length about this risk in the last chapter of my book, India's Open-Economy Policy (London and New York: Routledge, 2009). Would be interested in your forecast for 2009...

Jalal Alamgir, Ph.D.
Red Bridge Strategy
Blog at http://localandglobal.wordpress.com/