Industrial Outlook
Industrial Outlook is an economic indicator that measures the degree of optimism or pessimism that manufacturing companies feel about the overall business climate. It is a widely-used economic indicator, which serves as a barometer of the health of the economy from the perspective of the businesses. When business confidence in the economy is high, they make higher investments, manufacture more and save less. When confidence is low, businesses tend to be more conservative and spend less.
The business confidence is measured through a quarterly Industrial Outlook Survey (IOS) conducted by the Reserve Bank of India (RBI). The survey obtains information on business sentiments and captures qualitative responses on nine indicators - production, order books, pending orders, capacity utilization, exports, imports, employment. For each round of the survey, approx. 800-1,000 businesses are canvassed around India.
The IOS responses are measured through two indexes:
- Business Assessment Index (BAI) - Business sentiment about current business and job market conditions as compared to a quarter ago
- Business Expectations Index (BEI) - Expectations about business climate in the next quarter
Industrial Outlook is an economic indicator that measures the degree of optimism or pessimism that manufacturing companies feel about the overall business climate. It is a widely-used economic indicator, which serves as a barometer of the health of the economy from the perspective of the businesses. When business confidence in the economy is high, they make higher investments, manufacture more and save less. When confidence is low, businesses tend to be more conservative and spend less.
The business confidence is measured through a quarterly Industrial Outlook Survey (IOS) conducted by the Reserve Bank of India (RBI). The survey obtains information on business sentiments and captures qualitative responses on nine indicators - production, order books, pending orders, capacity utilization, exports, imports, employment. For each round of the survey, approx. 800-1,000 businesses are canvassed around India.
The IOS responses are measured through two indexes:
- Business Assessment Index (BAI) - Business sentiment about current business and job market conditions as compared to a quarter ago
- Business Expectations Index (BEI) - Expectations about business climate in the next quarter
SUBJECT Variables
BUSINESS ASSESSMENT INDEX (BAI)
- The business assessment index (BAI) dropped to 115 in Q3 '21-22 from 119.4 in the previous quarter, reflecting a softening of the overall business sentiments in the Indian manufacturing sector.
- Manufacturing companies assessed improvement in demand conditions in terms of production, order books, and employment situation in Q3 '21-22, albeit at a slower pace when compared to the previous quarter.
- Sentiments on capacity utilisation and availability of finance improved in Q3 '21-22 after a decline in the previous quarter.
- Sentiments on the financial situation improved substantially and optimism prevailed on the availability of finance from all three sources (viz., internal accruals, banks, and overseas).
- Manufacturers perceived continued price pressures with some softening in the pace of increase in input cost and selling prices; they also the profit margin to remain in positive terrain with some moderation compared to the preceding quarter.
BUSINESS EXPECTATIONS INDEX (BEI)
- The business expectations index (BEI) remained in the optimist territory though it moderated slightly to 137.8 in Q4 '21-22 from 139.3 in the previous quarter
- Capacity utilisation and overall financial situation are expected to improve further in Q4 '21-22, though the optimism is slightly lower compared to the previous quarter.
- The input cost pressures are likely to remain elevated in Q4 '21-22 while selling prices and profit margins are expected to soften a bit.
TO READ THE FULL ARTICLE
Get full access to the exciting content on The Mirrority by logging in
Support independent journalism
Even the very best of media houses in our country today are yielding to the pressure of click-bait journalism in order to survive. More than ever before, our country needs journalism that is independent, fair and non-pliant to the bureaucracy. Such journalism needs the support of like-minded readers like you to help us survive editorially and financially.
Whether you live in India or India lives inside you, help us continue to produce quality journalism with your contribution.
CONTRIBUTE