Indian cos more confident on business outlook vs peers; watch out for headwinds
emerging market averages but trailing the global reading (+28%). The net balance is derived by subtracting the percentage of respondents expecting a decrease or deterioration in a variable over the next twelve months from the percentage expecting an improvement or increase. Nevertheless, India emerged as one of only four countries to witness a rise in output prospects, while confidence dwindled in the remaining eight countries with comparable data, added the report.
In the comparison between sectors, Indian manufacturers displayed a sentiment close to a two-and-a-half-year high, surpassing that of service providers. Further, forecasts that demand conditions will remain favourable in the year ahead also boosted optimism towards business activity and capital expenditure among private sector companies in India during June. Among the other key findings of the survey, non-staff cost inflation expectations of Indian firms dipped to their lowest in two years in June.
Although input cost inflation pressures appear to be easing, the report highlighted an uptick in charge inflation or selling price expectations to the highest since February 2022. Manufacturers were particularly confident about their pricing power, marking the highest net balance increase since February 2021, the report added. To be sure, higher selling prices bode well for the profitability of companies, but in the backdrop of headwinds to local and global demand, this could backfire on overall demand outlook.
Note that the recently released trade data for June, continued to show muted growth trends. “With global commodity prices now normalizing imports may see further reduction in value terms. Even domestic demand may see some correction which will also keep the
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