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Manufacturing PMI holds up, but headwinds are mounting India’s manufacturing PMI held up well in April, reflecting the fact that the containment measures in response to the surge in COVID-19 cases have been very light touch compared to last year. But the …
3rd May 2021
Rebound in industry overtaken by second wave India’s core infrastructure industries index rebounded in March, but this is old news given the dramatic surge in virus cases and renewed tightening of containment measures since then. The core infrastructure …
30th April 2021
Fuel-driven rise in headline WPI inflation will be short-lived The faster-than-anticipated acceleration in headline wholesale price inflation in March was driven by a surge in fuel inflation, but we think it should fall back soon enough. And with the …
15th April 2021
Rising headline inflation won’t trigger rate hikes India’s consumer price inflation jumped to a four-month high in March as food inflation accelerated. But we doubt that the headline rate will continue rising for much longer and, with the economic …
12th April 2021
Strong Q1, but outlook deteriorating India’s PMI readings for March indicate that the economic recovery continued to progress well at the end of Q1. But with virus cases surging and new restrictions quickly coming onto the agenda, the outlook has taken a …
7th April 2021
Manufacturing outlook takes a turn for the worse India’s manufacturing PMI for March indicates a continued rebound in the sector last month, but that has already been overtaken by more recent events. In particular, the renewed surge in new COVID-19 cases …
5th April 2021
Industrial outlook takes turn for the worse Growth in India’s core infrastructure industries slumped in February and, with the broader industrial outlook taking a turn for the worse as new COVID-19 cases mount, the RBI is likely to keep policy very …
31st March 2021
Rise in headline WPI inflation won’t trigger a rate hike The acceleration in headline wholesale price inflation in February to a two-year high will do little to dampen growing market expectations of rate hikes in the very near future. However, we still …
15th March 2021
Rebound in headline inflation won’t trigger a rate hike Headline CPI inflation rebounded in February, but we doubt that this will lead to a rate hike at the upcoming MPC meeting in April. The renewed contraction in industrial output in January clearly …
12th March 2021
PMIs point to a continued economic recovery India’s PMI readings for February suggest that output has rebounded further above pre-virus levels so far this quarter. With fiscal policy turning more supportive and new virus cases remaining low, the recovery …
3rd March 2021
Manufacturing sector holding up well India’s manufacturing PMI reading was virtually unchanged in February and remains consistent with a strong recovery in the sector so far this quarter. That should continue over the coming months, helped by looser …
1st March 2021
GDP returns to pre-virus level India’s Q4 GDP data confirm that the economy continued to perform well at the end of 2020 and the outlook for this year has improved too as fiscal policy has been loosened substantially. Even so, we doubt that GDP will be …
26th February 2021
Low inflation means RBI can keep policy loose CPI inflation dropped back to a fraction above the RBI’s long-term target in January, its lowest since 2019. It should remain well inside the target band over coming months as easing supply constraints offset …
12th February 2021
PMIs point to decent start of 2021 India’s PMI readings for January suggest that the economy is still rebounding and, with fiscal policy finally being loosened significantly, a decent recovery over the coming quarters looks a stronger bet now than it did …
3rd February 2021
PMI rises but policymakers can still do more India's manufacturing PMI reading edged up in January but, given signs elsewhere that the industrial recovery has lost a bit of steam, policymakers should still be aiming to provide support to the economy. Like …
1st February 2021
Industrial recovery lost some steam in Q4 India’s core infrastructure industries index didn’t improve much in December, which suggests that the industrial rebound lost some steam in Q4 and underscores the need for policymakers to provide further support …
29th January 2021
Drop in food inflation causes headline WPI to fall The drop in headline wholesale price inflation in December was driven by a sharp fall in food inflation, while core inflation rose. Nevertheless, taken alongside the sharp drop in CPI inflation last …
14th January 2021
India’s inflation drop raises chances of rate cut The drop in India’s consumer price inflation in December strengthens our view that monetary policy will remain very loose for a long time to come, and could even be enough to trigger a policy rate cut at …
12th January 2021
PMIs consistent with a continued recovery in Q4 India’s PMI readings were a mixed bag in December but are still consistent with a continued economic recovery across Q4 as a whole. Further improvements should follow, especially given promising COVID-19 …
6th January 2021
Manufacturing recovery continues India’s manufacturing PMI reading for December points to a continued rebound in the sector at the end of last year. And the recovery could gain further momentum if COVID-19 vaccines are successfully distributed in India …
4th January 2021
Price pressures finally easing The drop in India’s consumer price inflation in November is likely to mark the start of a broader easing of price pressures. That would allow the RBI to keep monetary policy loose for some time to come. Headline CPI …
14th December 2020
Core inflation showing no signs of easing The rise in headline wholesale price inflation in November was driven by a further acceleration in core inflation but this could go into reverse soon, especially if a COVID-19 vaccine is successfully distributed …
Industrial recovery again surprises on the upside Industrial production rose by more than most had anticipated in October. Output is now growing as fast in y/y terms as it was before the pandemic hit. A near-term slowdown is a possibility but the outlook …
11th December 2020
PMIs consistent with continued recovery in November India’s PMI readings edged down in November but still point to a continued economic recovery last month. This is likely to remain the case over the coming months as COVID-19 restrictions gradually get …
3rd December 2020
Manufacturing recovery still on the mend The drop in India’s manufacturing PMI in November comes as no surprise given that it hit a decade high in October. The big picture is that the reading is still consistent with a decent recovery in manufacturing …
1st December 2020
Output still 9% below pre-virus level in Q3 The y/y slump in Indian GDP eased substantially in Q3 (Q2 of FY20/21), but output was still 9% below its pre-virus level last quarter. Looking ahead, encouraging news on vaccines has brightened the outlook, but …
27th November 2020
Core inflation drives pick up in headline rate The rise in headline wholesale price inflation in October was largely the result of a jump in core inflation, which adds to the evidence from the latest CPI data that underlying price pressures are proving …
16th November 2020
Headline inflation jumps unexpectedly Headline consumer price inflation jumped in October further above the RBI’s 4% target, which removes the remote possibility of a rate cut at next month’s MPC meeting. But there are still reasons to think that headline …
12th November 2020
Industrial recovery gaining some momentum Industrial production rose above its level a year ago for the first time in seven months in September, suggesting that the recovery in Q3 will have been better than we had been expecting. Adding to the encouraging …
Economic recovery gaining momentum The rise in the October PMIs suggests that the economy has been rebounding a little faster than we had thought. However, there are still plenty of headwinds to the recovery. Over recent months, the PMIs have been more …
4th November 2020
Manufacturing recovery gathers pace The rise in the manufacturing PMI to its highest reading in over a decade in October suggests that the recovery has been stronger than we had anticipated. But given the damage to corporate balance sheets and that …
2nd November 2020
Industrial recovery picks up a bit of pace The slump in the core infrastructure industries index eased in September, and this suggests that overall industrial output contracted by 8% in Q3. That’s a slight upside risk to our GDP forecasts. The core …
30th October 2020
WPI inflation rises by more than expected The rise in headline wholesale price inflation in September was sharper than expected but, with price pressures likely to ease in earnest over the coming months, we think further policy rate cuts are still on the …
14th October 2020
Headline rate has probably peaked Headline consumer price inflation rose by more than expected in September but there are signs that it may now have peaked. We think it will drop in earnest over the coming months which will open space for the RBI to …
12th October 2020
Industry still struggling to recover The slump in industrial production eased in August but output is still well below its pre-virus levels. And the fiscal stimulus package announced today will do little to boost demand. The recovery in industry, much …
Signs of life in the recovery The rise in the September PMIs is a welcome sign that the economic recovery still has legs. But with new virus cases in India still high, the road to normality will almost certainly remain long and difficult. The PMI readings …
6th October 2020
Strength in manufacturing PMI won’t be sustained The jump in September’s manufacturing PMI reading to its highest in over eight years is a much-needed sign that the recovery still has some legs. But with India now a virus epicentre, containment measures …
1st October 2020
Industrial recovery stutters The recent improvement in output in the core infrastructure industries came to an abrupt halt in August. With India now a virus epicentre, containment measures are likely to remain in place for a long time yet, which will …
30th September 2020
High core inflation to delay next rate cut Following the greater-than-expected rise in wholesale price inflation last month, it will come as some relief to policymakers that consumer price inflation held steady in August. That said, core inflation is …
14th September 2020
WPI inflation rises by more than expected Wholesale price inflation rose by more than most had expected in August, due mainly to a jump in the core component. A similarly sharp rise in core consumer price inflation last month – data will be released later …
Industrial recovery running out of steam The contraction in industrial output eased a little further in July but was still well below pre-virus levels. With India now on course to becoming the epicentre of the coronavirus, restrictions are likely to …
11th September 2020
Still a very long way from normal The rise in the August PMIs pales in comparison with the falls during the lockdown and it is highly likely that output is still a very long way from pre-pandemic levels. Given the bleak economic outlook, we think the RBI …
3rd September 2020
Manufacturing recovery will prove slow and fitful The rise in August’s manufacturing PMI is cold comfort when set against the extremely weak GDP data for Q2 released yesterday. And with new coronavirus cases showing no signs of abating, we think the …
1st September 2020
Almighty slump to be followed by weak recovery The 24% y/y slump in Indian GDP in Q2 (Q1 of FY20/21) is one of the largest peak-to-trough falls anywhere in the world. With the country still battling with its coronavirus outbreak, the rebound in India’s …
31st August 2020
Headline WPI inflation rises but remains low While the rise in headline wholesale price inflation was expected, underlying price pressures appear stickier than we had initially thought. We think these will still ease over the coming months, but the next …
14th August 2020
High core inflation to delay next rate cut The unexpected jump in headline inflation last month was the result of core inflation being higher than we had anticipated. We suspect core inflation will eventually ease back due to the weakness of domestic …
13th August 2020
Economic recovery is beginning to stall The July PMI surveys have been a mixed bag but, taken together with evidence elsewhere, they suggest that the post-lockdown economic recovery is stalling. This adds to the case for further monetary easing, and we …
5th August 2020
Manufacturing recovery losing steam The small drop in July’s manufacturing PMI adds to signs elsewhere that the post-lockdown recovery is stalling. Looking ahead, the road back to normality for the manufacturing sector will be slow and fitful. India’s …
3rd August 2020
A difficult road ahead for Indian industry The contraction in India’s core infrastructure industries index eased slightly in June, but the weakness of industry will still have weighed heavily on GDP in Q2. What’s more, there are already signs that the …
31st July 2020
WPI inflation rebounds but remains low The wholesale price index is not the preferred measure of inflation for policymakers, but the broad-based rebound in the headline rate challenges our view that price pressures will ease this year. Nevertheless, given …
14th July 2020