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Quick Edit | The engine sputters

Quick Edit | The engine sputters
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First Published: Wed, Jun 01 2011. 11 59 PM IST
Updated: Wed, Jun 01 2011. 11 59 PM IST
Data released by the Indian government on Tuesday shows that investment activity had ground to a halt in the last three months of the previous fiscal. Economic growth was supported by consumer spending and net foreign demand.
Now these two engines could be faltering.
The Markit Purchasing Managers’ Index for May —a useful lead indicator of economic activity— suggests that domestic and foreign demand for Indian factory output is weakening. This spells trouble.
To be sure, Indian industry continues to expand. India seems more likely right now to have a soft landing than China does. But this combination of weak consumer demand and anaemic capex by firms is not good news.
The new survey data also shows that input prices have dropped sharply, perhaps because of the global correction in commodity prices. It could mean less margin pressure for companies.
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First Published: Wed, Jun 01 2011. 11 59 PM IST