Economic Activity In India Showed Signs Of Slow Down In December

The economic activity released for the month of December 2018 showed signs of slow down. A Bloomberg report provided a clearer indication with "animal spirits," a gauge that is used to measure overall activity, as it lowered two notches in December when compared to a month ago.

The indicator compiled by Bloomberg along with the fall of Nikkei India Composite PMI Output Index falling to 53.6 from a 25-month high of 54.5 in the same month points out a the drop in new orders and business activity along with the ease in inflationary pressure.

However, easing input-cost pressure is likely to help inflation-targeting Reserve Bank of India (RBI) to cut interest rates in upcoming six-member monetary policy committee meeting led by the new Governor Shaktikanta Das.

As for exports, there was hardly any change from December 2017 and only grew slightly when compared to November 2018 due to a global slowdown in growth seen in the same month. The gap between exports and imports reduced to $13 billion in the month under review when compared with $16.7 billion in November due to a drop in crude oil prices that helped contract the import bill.

The report further said that infrastructure industries, that contribute 40 percent to factory output, showed a considerable slowdown in growth for November to the lowest reading in 16 months dragged down by a drop in crude oil and fertilizer production. The overall growth in industrial production index lowered, expanding at 0.5 percent in November when compared to a year ago, a 17-month low. Note that these two indicators are reported with a month's lag.