Searching for the Bottom

Did people actually buy televisions and other appliances before the festive season began? If you take yesterday's industrial production figures seriously, you would probably conclude so. Consumer durable production has done badly. Whether anyone takes the figures seriously or not, the figures look quite serious with almost all sectors doing badly except electricity. One of the reasons one has to carefully look at industrial production data is because it often has quirks that are not immediately apparent. Thus, it is probably better to see something going on for some months before concluding something is actually happening. Of course, there can be no doubt in anybody's mind that industrial production and industry is doing badly. That has been going on for many months now. Even though people keep looking for signs of a turnaround, there just doesn't seem to be any evidence of it. Very clearly, manufacturers are making adjustments to their production levels, in many cases reducing production, sometimes even shutting down facilities periodically. Even as this happens, adjustment of inventories is also happening. Then, there is the prickly receivables issue where people down the line are grappling with outstanding payments thanks to the tight liquidity conditions. In such conditions, it is not unusual for smaller outfits to go belly-up. We all know that you can be asset rich and have sales going but working capital or shall we say, cash, is the king. It is the lifeblood of business. Suck that out and business first heads for the ICU and then to its grave. Much of all this happening at a pretty wide scale and I realised this during my short break last week as I interacted with various people from small scale entrepreneurs to shopkeepers on sidewalks .
 Of course, there are people who keep wondering when the investment cycle will kick off. I would say that it is a long way off. Biggies will wait for elections. Nobody likes dealing four-, ten-, twenty-headed authorities indulging in multiple speak about rules and giving them a hard time. For others, they will try to first get a  fix on what to do with their existing investments and capacities. That would go on for some time. As for me, I am really not expecting industrial scene to change any time soon.