High frequency indicators point to pick in growth momentum: Morgan Stanley

MUMBAI: Recent high frequency growth indicators suggest that the growth momentum has gathered pace in December, said a report by global investment bank, Morgan Stanley.

Purchase Managers’ Indices (PMIs), sales of commercial vehicles, steel and cement demand growth have accelerated on a sequential basis, suggesting a further uptick in economic activity. “We expect the trade data to also mirror this strength – with both exports and imports growth holding up well” said a report by Morgan Stanley released to the media on Wednesday.

December’s inflation data would likely rise further, though partly due to an unfavourable base of comparison. In particular, the trend in core-core inflation (inflation ex food, fuel and housing) will be key to watch to assess the trend in underlying inflation dynamics.


On the production side, Morgan Stanley expects November’s industrial production to have improved as was corroborated by the improvement in most high frequency growth indicators in the month.

As for CPI Inflation for December which is expected to be out on January12, it is expected that headline CPI inflation will rise further, reaching 5.4% year-on-year (YoY) in December from 4.9% (YoY) previously, though partially due to an unfavourable base of comparison.

High frequency indicators suggest that food prices have come off sequentially, largely driven by a seasonal dip in vegetable prices but an unfavourable base of comparison means that food inflation would still be higher on a YoY basis at 5.4%(YoY) versus 4.4%(YoY) in November.