ABM Amro employment index story
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ABM Amro employment index story

The overall index, however, shows an improvement in the business environment in the country, reports Suman Layak.

india Updated: Feb 05, 2007 00:18 IST

The robust growth in jobs in the Indian manufacturing sector over the last few months seems to be slowing down. And the factor that has been fuelling job growth in manufacturing – the order backlog – has not grown at all in January 2007.

The growth has been tracked as a part of the ABN AMRO Purchasing Manager’s Index, over the last 22 months.

The employment index, which is a part of the overall index that tracks the manufacturing sector, shows a value of 50.7 for January 2007. A value of 50 means there has been no change. While a value less than 50 means there has been decrease in jobs, and if the value is higher than 50 it means new jobs have been created.

The employment index is now at the lowest in the last 22 months since ABN AMRO started tracking it. In August 2006 the employment index was at 51.9 and in December it was at 51.

As any figure above 50 indicates job growth, ABN AMRO’s chief economist Abheek Barua had said a few months ago that this extended period of job growth indicates the end of ‘jobless growth’ in India.

However, with the index dipping sharply over the last five months, the indications are that there may be a period of job curtailment coming up ahead in future.

For the time being though, the jobs are growing. The report says, “This was the least marked rate in increase of staffing levels in the 22 months of data collection so far. Panel members indicated that they had increased employment in response to higher volumes of incoming new business.”

This is the crucial information, as the growth of the order backlog seems to have stopped. The backlog of orders index is actually at 50, which means the pending jobs have not grown in January 2007.

The report says that the total order backlog has been growing since May 2006 and this is the first time that there has been no growth in the order backlog. The reasons behind the order backlog not growing is higher manufacturing capacity, the report says.

The overall index, however, shows an improvement in the business environment in the country and although most of indices have fallen this month, they are all in the positive territory indicating overall growth.

Email Suman Layak: sumanlayak@hindustantimes.com

First Published: Feb 05, 2007 00:18 IST