BluFins Business Cycle Indicator for September moves up

Glimmer of hope for turnaround in early 2013

Indicating a change in outlook for commerce and real economy, the BluFin Business Cycle Indicator (BCI) rose in September 2012 to 157.4, a shed up from 157.3 in August.

The index grew for second month in a row. It was 156.8 in July 2012. The implied annual growth rate in September 2012 is 2.5 per cent.

BluFin, a financial information and content company, in a statement said there has been improvement in production across almost all basic and intermediate goods tracked by its index.

The BluFin’s BCI is a monthly composite indicator. Its components fall under Capital Markets, Foreign Trade, Policy and the Real Economy.

 

Revenues from foreign tourists have also shown some improvement. The data relating to intermediate goods and services showed better reading.

If this uptrend extends till October 2012, there is a likelihood of a new phase of growth in the Indian business cycle to begin. Given the leading property of the BCI, the real economy is expected to start showing signs of improvement by early 2013.

The growth rates are very low. Yet, a moderate monthly improvement for two straight months and a continuous y-o-y growth points out to a clear evidence of the business cycle to be healing.

The weakness in consumer sector remains matter of concern. The sales for two and four wheelers have been weak as also domestic air traffic.

Confidence in the economy should improve after recent fiscal policy announcements aimed at the consolidation of expenditures and reform biased towards a relatively free economy.

However, for confidence to generate actual growth in the economy, it is crucial that these announcements be implemented reasonably soon, it said.