The MNI India Business Indicator fell to 57.8 in December from 64.6 in November, the lowest since July as both Production and New Orders fell, with the manufacturing sector leading the decline.
Eleven out of 15 current conditions indicators declined in December in a disappointing end to what has been a tough year for business as economic growth has slowed sharply while inflation has accelerated. Business confidence is some 10% lower than in December 2012.
Production and New Orders fell, although Export Orders picked up a little, possibly helped by the depreciation in the exchange rate this year.
Inflationary pressures eased a little in December although remained at elevated levels with significantly more companies reporting rising input costs and prices received for their products.
In December, more companies expected their credit costs to ease in three months' time. Credit availability has decreased but is expected to recover in the first quarter.
Commenting on the latest survey, MNI Indicators Chief Economist Philip Uglow said, “The end of the year was marked by a fall in confidence among some of India’s largest companies with optimism at the lowest for five months.”
”While conditions have improved greatly from the lows seen in April, the environment is challenging. The continued high level of inflation is a cause of uncertainty forbusiness and damages the countries’ growth prospects,” he added.
