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The Sales Managers' Index: India

Released: March 24, 2015

India’s business confidence very high on positive investment climate

  • SMI signals sustained improvement in business conditions
  • Softer rates of sales and market growth offset by further improvement in employment
  • Inflationary pressures remain modest despite weaker rupee

The Headline Sales Managers’ Index (SMI) for India registered 68.2 in March, unchanged from February’s reading, thus signalling a sustained improvement in overall business conditions across the economy. Weighting on the headline index were softer readings in business confidence, market growth, and product sales. Only stronger prices charged and staffing levels acted to offset the SMI in the latest survey period. That said, the current reading continued to be well above the long-run series average of 60.8.

Indian sales managers remained exceptionally optimistic during March. The Business Confidence Index, which measures how sales managers expect the economy to perform over the next few months, stood at 90.9, down from 91.2 in February. Panel members attributed these very high levels of optimism to improved market conditions, low inflation rates, and positive investment climate. Nevertheless, the degree of optimism eased for the fourth successive month, and was the lowest level since June 2014.

Market growth as reported by Indian sales managers eased for the second consecutive month in March. The Market Growth Index, which reflects growth of the general marketplace in panellists’ own industry sectors, fell to 62.4 from 63.4 in February. However, the latest reading of 62.4 is still well above the long-term average of 58.8 and indicated that sales managers continued to experience high levels of market expansion across the country. Similarly, the Product Sales Index fell in line with the Market Growth Index, registering 74.4 in March. That was down from 74.7 in February, and suggested only a slight decline in the rate of sales growth. Sales managers reported on-going declines in energy prices as the primary reason to these very high levels of sales demand.

On the prices front, prices set by sales managers rose at a modest pace in March, reversing a slight reduction during February. The Prices Charged Index registered 51.8, down from 51.1 on the previous month. An index above 50 indicates an expansion, while an index below 50 indicates a contraction. The latest value of 51.8 signalled that inflationary pressures remained modest despite a weaker rupee, with surveyed managers commenting on weaker exchange rates and higher food prices as the main contributors to the modest increase in prices charged. Where lower prices were reported, surveyed managers referred to the on-going falls in global oil & commodity prices.

Moreover, the Staffing Index picked up further in March to stand at 61.8, up from 60.8 in February, signalling the fastest level since May 2014. Sustained job growth has now been recorded by the survey throughout the past five months, with companies attributing the additional staff recruitment to ongoing efforts to boost capacity and expectations of rising workloads in the months ahead.

World Economics Chief Executive Ed Jones commented:
“March’s SMI data pointed to fast and continuous improvement in economic activity in India. Weaker rates of business confidence, market growth and product sales were offset by stronger rates of prices charged and employment.             

Notwithstanding, sales managers remained very optimistic about future business conditions across the country, with the latest Business Confidence Index suggesting on-going market expansions over the next few months.

In addition, the continuing decline in global oil prices, which have driven down inflation in India for the past year, will give more room to the central bank to cut interest rates further to spur growth.”


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Notes to Editors
The Sales Managers’ Index results are calculated as diffusion indexes which have the characteristics of leading indicators by taking the percentage of respondents that report that activity has risen (“Increasing") and adding it to one-half of the percentage that report the activity has not changed (“Unchanged"). Using half of the “Unchanged" percentage effectively measures the bias toward a positive (above 50 points) or negative (below 50 points) index. An example of how to calculate a diffusion index: if the response is 40% “Increasing," 40% “Unchanged," and 20% “Reducing," the Diffusion Index would be 60 points (40% + [0.50 x 40%]). A value of 50 indicates "no change" from the previous month.

The more distant the index is from the amount that would indicate "no change" (50 points), the greater the rate of change indicated. Therefore, an index value of 58 indicates a faster rate of increase than an index value of 53, and an index value of 40 indicates a faster rate of decrease than an index value of 45. A value of 100 indicates all respondents are reporting increased activity while 0 indicates that all respondents report decreased activity.

Three month Moving Averages are applied to each index to mitigate the effect of seasonal variations, original unadjusted data are not revised after publication.

About the Sales Managers’ Index
The Sales Managers’ Indexes are a series of products developed by World Economics which counts panellists in over 70 countries worldwide. Designed to raise the voice and profile of sales people throughout the world, the Sales Managers’ Indexes provide the earliest indication each and every month of the direction of economic activity, and the speed at which its markets are growing.

Sales Managers are unique as an occupational group in being right at the front line of economic activity. The Sales Manager is ideally placed to feel the first few whispers of caution in the market or to see the new green shoots of economic recovery.

The Sales Managers’ Index brings together the collective wisdom of Sales Managers and consequently produces the best and earliest source of understanding about what’s really happening in each economy.

The Sales Managers’ Index has been developed by World Economics, a leading edge provider of original economic data. Sister products include the World Price Index, Global Marketing Index, World Economics Journal, as well as country level Growth Trackers.

About World Economics
World Economics is an organisation dedicated to producing analysis, insight and data relating to questions of importance in understanding the world economy. Its parent company Information Sciences Ltd has a long history of the development of key business information today used throughout the world, including the origination of the Purchasing Managers Indexes in Europe and Asia (now owned by Markit), and the development of WARC a global information provider for major corporations .

Currently our primary research objective is to encourage and assist the development of better and faster measures of economic activity. In cases where we believe we can contribute directly, as opposed to through highlighting the work of others, we are producing our own measures of economic activity.

Our work is mainly of interest to investors, organisations and individuals in the financial sector and to significant corporations with global operations, as well as governments and academic economists.

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