ECONOMY SET TO TURN THE CORNER RIGHT INDICATORS
The Economic Times, April 29, 2009, Page 1
From rosy investments to vibrant hiring to smooth sailing for ports to fired-up output data,all signs are that the bounce is indeed back for the economy
Anto Antony, NEW DELHI
GROWTH ahoy! A raft of lead indicators, investments that refuse to flag, rejuvenated hiring, sprightly freight movement at major ports and robust data from key manufacturing segments indicate that the downturn has bottomed out and that the economy is poised to regain its vigour.
Nomura’s Composite
Leading Index (CLI), UBS’ Lead Economic Indicator (LEI) and ABN Amro’s Purchasing Managers’ Index (PMI) all point to a pick-up in growth soon. And CMIE’s capex database, which tracks investments by companies, shows no big slowdown in this space.
A lead indicator is a composite of a variety of indices that track activity in vital economic sectors.
And that’s not all. The strong showing of sectors such as auto, cement, steel, capital goods, port traffic along with record telecom subscriber additions supports the strong turnaround thesis of these lead indicators.
After three months of rise on the trot, UBS’ LEI index for India now stands at 2.1; it touched a low of -2.08 last December. The LEI is a composite indicator of variables like government bond yields, M1 money supply, currency risk premium, foreign exchange reserves and stock market gains.
UBS’ economist Philip Wyatt expects a sustained recovery thanks to India’s low levels of excess capacity, private sector indebtedness and non-performing loans. ”With this significant rebound in LEI, we are more confident of a turning point in the industrial cycle by June 2009,” says Mr Wyatt in a research report.
Nomura’s composite leading index (CLI)—used to identify the turning points in the growth rate cycle—rose in the first quarter of 2009 after four consecutive quarterly falls. As the CLI indicates a turnaround in non-agricultural GDP growth rate with a two quarter lead time, the pick-up in the first quarter of 2009 hints at a recovery from June.
ABN Amro’s PMI—an indicator of the country’s manufacturing scene based on a survey of 500 companies—has improved to 49.5 this March from 44 last December. A reading below 50 indicates contraction. The PMI jump to nearly 50 suggests that manufacturing has put the contraction days behind and is poised to enter an expansion phase.
The Economic Times, April 29, 2009, Page 1
From rosy investments to vibrant hiring to smooth sailing for ports to fired-up output data,all signs are that the bounce is indeed back for the economy
Anto Antony, NEW DELHI
GROWTH ahoy! A raft of lead indicators, investments that refuse to flag, rejuvenated hiring, sprightly freight movement at major ports and robust data from key manufacturing segments indicate that the downturn has bottomed out and that the economy is poised to regain its vigour.
Nomura’s Composite
Leading Index (CLI), UBS’ Lead Economic Indicator (LEI) and ABN Amro’s Purchasing Managers’ Index (PMI) all point to a pick-up in growth soon. And CMIE’s capex database, which tracks investments by companies, shows no big slowdown in this space.A lead indicator is a composite of a variety of indices that track activity in vital economic sectors.
And that’s not all. The strong showing of sectors such as auto, cement, steel, capital goods, port traffic along with record telecom subscriber additions supports the strong turnaround thesis of these lead indicators.
After three months of rise on the trot, UBS’ LEI index for India now stands at 2.1; it touched a low of -2.08 last December. The LEI is a composite indicator of variables like government bond yields, M1 money supply, currency risk premium, foreign exchange reserves and stock market gains.
UBS’ economist Philip Wyatt expects a sustained recovery thanks to India’s low levels of excess capacity, private sector indebtedness and non-performing loans. ”With this significant rebound in LEI, we are more confident of a turning point in the industrial cycle by June 2009,” says Mr Wyatt in a research report.
Nomura’s composite leading index (CLI)—used to identify the turning points in the growth rate cycle—rose in the first quarter of 2009 after four consecutive quarterly falls. As the CLI indicates a turnaround in non-agricultural GDP growth rate with a two quarter lead time, the pick-up in the first quarter of 2009 hints at a recovery from June.
ABN Amro’s PMI—an indicator of the country’s manufacturing scene based on a survey of 500 companies—has improved to 49.5 this March from 44 last December. A reading below 50 indicates contraction. The PMI jump to nearly 50 suggests that manufacturing has put the contraction days behind and is poised to enter an expansion phase.
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