Leading economic indicators suggest that economic growth continues to remain sluggish. Industrial activity contracted by 0.1 in June showed data released by the Central Statistics Office (CSO). Growth for the entire first quarter is an anaemic 2 per cent.
What is even more worrying is that capital goods, a proxy for investments, contracted by 6.8 per cent in June. It has now contracted by 3.9 per cent in the first quarter suggests that an investment revival is unlikely in the near term.
With the Nikkei’s Purchasing Managers index (PMI) for both manufacturing and services showing a contraction in activity in July, it suggests that IIP industrial activity may further weaken in the next month.