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India’s October production growth falls to 22-month low: PMI

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Mumbai: A leading international business survey on Monday showed decline in India’s manufacturing sector growth as it touched a 22-month low in October largely due to a slower increase in new orders.
Revealing the weakest purchasing activity since December 2013, the Nikkei India Manufacturing Purchasing Managers Index (PMI) recorded an eight-month low in October at 50.7, down from 51.2 in September and from 52.3 in August.

According to the PMI report published by financial information services provider Markit, in which a value above 50 in the reading index indicates an overall increase in manufacturing and below 50 an overall decrease, expansion in production and order books were the weakest in their current 24-month growth sequence.

“Rates of expansion in both production and order books were the weakest in their current 24-month sequences of growth, with panellists reporting challenging economic conditions and a reluctance among clients to commit to new projects,” the report said.

“PMI data for October show a further loss of growth momentum across the Indian manufacturing economy, with a slower rise in new business inflows resulting in a weaker expansion of output,” said Pollyanna De Lima, economist at Markit and the report’s author.

Despite the slowdown in new order growth, manufacturers recruited additional workers in October. Employment rose only marginally for the first time since January.

“Undeterred by tough economic conditions overall, firms took extra staff in October. This, combined with a further drop in inventories of finished goods, suggests that production growth may rebound in coming months,” Lima said.

The report said October saw inflationary pressures return to India’s manufacturing economy. Average purchase costs rose, though the rate of increase was “slight”, the survey said.

Part of the additional cost was passed on to clients by raising tariffs.

“A return to inflationary pressures, meanwhile, indicates that RBI may pause its loosening cycle for the rest of the year following a 50 basis points cut of the key repo rate in September,” Lima said.

“Upcoming survey data will show how effective the central bank’s effort to revive the economy has been,” Reserve Bank of India Governor Raghuram Rajan on September 29 cut the RBI’s repo rate, at which it lends to commercial banks, to 6.75 percent making it the third cut in the bank’s short-term lending rate this year.

The RBI has also lowered its GDP growth forecast for the current fiscal to 7.4 percent, from its earlier projection of 7.6 percent.

Under the PMI, the manufacturing sector is divided into 8 broad categories of basic metals, chemicals and plastics, electrical and optical, food and drink, mechanical engineering, textiles and clothing, timber and paper and transport.

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Internet Of Things Needs World Market Leaders, Interest Turns to Startups

Google and Microsoft dominate markets worldwide

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An employee displays ASUS’s new computer products during the Computex Taipei, one of the world's largest IT expos, in Taipei, Taiwan, Tuesday, June 5, 2018. Computex will run in Taipei from June 5 to 9. VOA
An employee displays ASUS’s new computer products during the Computex Taipei, one of the world's largest IT expos, in Taipei, Taiwan, Tuesday, June 5, 2018. Computex will run in Taipei from June 5 to 9. VOA

A surge in participation by startup companies this week, at a highlight of Asia’s biggest annual tech event, shows an increased reliance on young entrepreneurs and leaders to come with the IT industry’s strongest ideas for connected devices and artificial intelligence.

The InnoVEX segment of Taipei Computex 2018 brought together 388 startups, a term usually defined as founder-owned firms of three to five years old. That number is a jump from 272 at the same event a year ago. Venture capitalists, including at least one with half a billion dollars in investment funds, evaluated them one-on-one and at formal pitching events.

Startups are catching attention as inventors of Internet-of-things technology because there’s no market leader yet, said Jamie Lin, founding partner of AppWorks Ventures, a startup accelerator in Taipei. That technology refers to software and hardware that let computers or phones communicate with everyday devices such as cameras and alarm systems.

Some connections run on artificial intelligence, which means computerized processing of the data collected from those devices. That can mean making human-like decisions.

“Computers continue to morph and there are no dominant players in IoT,” Lin said. “That’s why they need startups and that’s what makes the show relevant.”

In software, by contrast, Google and Microsoft dominate markets worldwide. Apple and Samsung, among others, lead in smartphones.

Coinciding with the tech show this week, Lin’s accelerator, another like it and a Japanese venture capital firm are all holding their own events in Taipei this week for startups.

Visitors review new MSI computer products during the Computex Taipei, one of the world's largest IT expos, in Taipei, Taiwan, June 5, 2018
Visitors review new MSI computer products during the Computex Taipei, one of the world’s largest IT expos, in Taipei, Taiwan, June 5, 2018, VOA

Expanding market

More than 20 billion things will be connected to the internet by 2020, up from 8.4 billion connected last year, market research firm Gartner forecasts. The number will pick up especially as 5G wireless services speed up connections.

By next year, Gartner anticipates, startup firms working with artificial intelligence will overtake Amazon, Google, Microsoft and IBM in “driving the artificial intelligence economy” for businesses.

Artificial intelligence, also known by its abbreviation AI, will reach a market value of $1.2 trillion per year by 2020 as investment triples between now and then, Forrester Research said.

“There’s a process, which is experimental — error and trial, error and trial – so there’s no one with a ready solution, and AI is so broad that one that can do it all,” said Tracy Tsai, a Gartner research VP in Taipei.

“With AI startups, they say ‘I’m focused, I just do some part of it and I do it well, and I do it attentively,’” she said. “For companies looking for a full solution, if you can show your part works, then they use it.”

Competitors perform speed tests using dry ice to cool hardware at OC World Record Stage 2018 during the Computex Taipei, one of the world's largest IT expos, in Taipei, Taiwan, June 5, 2018.
Competitors perform speed tests using dry ice to cool hardware at OC World Record Stage 2018 during the Computex Taipei, one of the world’s largest IT expos, in Taipei, Taiwan, June 5, 2018.VOA

Venture capitalists watching

Venture capital firms at the three-day InnoVEX show Wednesday watched a spread of mostly Asian startups with software and hardware ideas focused largely on connected devices. Healthcare and the management of drones were among the fields that companies said they could help with AI.

The show offered chances for startups to pitch their ideas to venture capital firms and accelerators, which are programs that show young firms how to improve their businesses.

Startup promotion authorities from 13 countries, including France and the Netherlands, also scanned the exhibition hall for Asian firms that might complement their own.

Visitors review Thermaltake's MFC 2 2nd Place MOD during the Computex Taipei, one of the world's largest IT expos, in Taipei, Taiwan, June 5, 2018.
Visitors review Thermaltake’s MFC 2 2nd Place MOD during the Computex Taipei, one of the world’s largest IT expos, in Taipei, Taiwan, June 5, 2018. VOA

“What we care about the most is whether these startups or smaller firms have technology, so if it’s a just a business model only, they aren’t suitable for us,” said Amanda Liu, CEO of the Taiwan government-backed business accelerator StarFab. Her accelerator takes 10 to 15 of every 100 applicants. “They need to have products and their core competence must come from technology.”

Taiwanese firms are good at altering hardware specs, Liu said, and for technology ideal for businesses rather than individual consumers, Liu said. Taiwan positioned itself decades ago as a high-tech hardware manufacturing hub for much of the world.

Qara was one AI-dependent startup at InnoVEX. The 4-year-old South Korean developer with $1 million in venture capital funding uses an AI algorithm to predict the movement of stock and cryptocurrency markets. It has earned revenues of $1.5 million and reports a profit.

“Anyone can see the predictions powered by AI,” said Qara’s global CEO Katie Bomi Son. In terms of accuracy, she said, “Some are from 70, or between 70 to 90. Most of our information [comes] from the machine.”

Also read: Russia’s heavy hand to internet to block messaging app

Qara counts mostly companies as clients but it’s looking for a way to monetize the free app for common users. (VOA)