Coming after an uptick in quarterly growth in the December quarter, the rebound in the index of industrial production (IIP) for January has lifted hopes about an economic turnaround. However, the IIP figures are at odds with the trend in the Nikkei manufacturing purchasing managers’ index (PMI), which fell for the second consecutive month in February. The corresponding index for services fell to a six-month low of 47.8 in February. A PMI reading below 50 indicates contraction, and one above 50 indicates growth. While IIP is a better predictor of quarterly gross domestic product (GDP) growth, the PMI—based on a survey of 400 industrial firms —is a relatively less volatile and perhaps a more reliable gauge of the momentum in the economy.

(Live Mint)