Production and New Orders Pick Up

Business confidence rose to the highest level since the survey began in 2012, amid growing optimism that the new government will revive the economy and improve the business environment.

The MNI India Business Indicator rose to 69.2 in June from 67.0 in May, led by higher optimism among manufacturing companies, whose confidence rose to the highest level in 12 months. The manufacturing sector is set to be central to the new government’s plan for turning the economy around and our survey shows they already sense positive changes ahead..

There were signs of a revival in demand. New Orders increased to the highest since September 2013, while Order Backlogs, which have trended upwards since the start of the year, jumped back above the breakeven 50 level. Companies were more optimistic about employment levels, and they expected to expand their workforce in the coming months in anticipation of increased demand.

statistics-76197_640Companies’ inflationary expectations eased, as future expectations for Input Prices fell to a record low level, helped by the appreciation in the rupee.

Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said:

“Euphoria following Modi’s landslide election win has no doubt helped to push business sentiment higher in June as corporates expect to see the new Prime Minister take swift action to bolster growth.

“The Modi government has its work cut out to live up to the high expectations being placed upon it. While our data is consistent with a pick-up in the economy in the latest quarter, there is a clear danger that the recovery takes longer than many are expecting.”

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