Mixed Signals

Context:

• Recent macro-economic data, including the official Index of Eight Core Industries for November and S&P Global’s survey-based Purchasing Managers’ Index (PMI) for the manufacturing and services sectors for December, offer mixed signals on the underlying momentum in the economy.

Details of Index of Eight Core Industries: 

• Overall growth observed: The output across the core industries, spanning coal to electricity, grew by an average 5.4%. Double-digit expansions in cement, coal, electricity and steel led the index higher.
• Sector-wise growth: Contractions in six of the eight sectors has been observed except for production of coal and cement, signalling that non-power demand for coal and construction activity.
• Positive Outcomes: The 12.3% year-on-year and 15.1% sequential expansion in coal output indicates an improvement in availability of the fuel to fire captive power plants and furnaces in the crucial process and metal-making industries.