MEMC rises on takeover report of rival
Panasonic Corp., Japan’s biggest home appliance maker, is cutting about 17,000 jobs worldwide over two years as its losses swell from restructuring costs and damage from the March 11 disasters.
President Fumio Ohtsubo said the company will streamline operations to boost profitability, including selling some of its businesses, and reduce its nearly 367,000 workers to 350,000 by the fiscal year ending March 2013.
Like other Japanese electronics makers including archrival Sony Corp., Panasonic has been struggling against competition from newcomers and formidable players from South Korea like Samsung Electronics Co., the world leader in flat-panel TVs. Panasonic has been steadily trimming its workforce to reduce costs. About a year ago it had 385,000 workers.
Osaka-based Panasonic reported a 40.7 billion yen ($499 million) loss for the January-March quarter on Thursday. The loss was largely due to 61 billion yen ($748 million) in restructuring costs, it said. Panasonic had reported an 8.89 billion yen loss for the same period the previous year.
The maker of Viera flat-panel TVs and Lumix digital cameras said its bottom line was also hurt by the March 11 earthquake and tsunami in northeastern Japan, which stalled production because of parts shortages and curbed consumer spending amid the ensuing nuclear reactor crisis.
Panasonic said it was unable to give forecasts for the fiscal year that began April 1 because it could not yet calculate the full damage from the disasters. It said the disasters shaved 21 billion yen ($258 million) off its operating profit for the fiscal year ended March 31.
Panasonic has been trying to turn itself around in recent years by adapting to a global shift toward cheaper gadgets, including new strategies that it is chiseling after adding Japanese battery and solar-panel maker Sanyo Electric Co. as a subsidiary.
Sanyo’s strength lies in cheaper home appliances as well as in solar-panel and battery businesses, which are expected to benefit from greater consumer enthusiasm for “green” energy-efficient technologies.
Ohtsubo said the businesses will be unified under the Panasonic brand, targeting 9.4 trillion yen ($115 billion) in sales for the fiscal year through March 2013.
Panasonic hopes to be No. 1 in the world in lithium-ion batteries and among the top global three in solar panels, he said.
A turnaround will come from boosting its flat TV operations, taking advantage of growth in new markets like India and Vietnam, Ohtsubo said.
“There is so much left for us to tackle,” he said from Osaka headquarters via a satellite feed in Tokyo. “We hope to revive our TV business.”
For the three months ended March 31, Panasonic’s global sales dipped 7 percent on-year to 2.04 trillion yen ($25 billion).
For the fiscal year, it reported a 74 billion yen profit ($908 million), a reversal from the 103.5 billion yen loss for the previous fiscal year.
A strong yen also hurt Panasonic, slashing fiscal year operating profit by 43.9 billion yen ($539 million). A strong yen hurts Japanese exporters by eroding the value of their overseas earnings.
(This version CORRECTS jobs cuts figure to 17,000.)
There are plenty of accolades you can heap on Berkshire Hathaway chief Warren Buffett, but "skilled energy speculator" may not seem like one of them.
Buffett fessed up not long ago to making a "major mistake" investing his holding company’s assets in oil. In 2008, when prices were heading to above $100 a barrel, Buffett quadrupled Berkshire’s stake in ConocoPhillips, just in time to witness crude’s slide to $40.
Buffett then turned around and sold off about two-thirds of that stake over the next two years, just as oil prices started to recover.
There’s a lesson here: It’s diabolically hard to time swings in the jumpy energy markets, even if you happen to be the smartest investor in the world. (Buffett hunting for another megadeal)
But look closely at the Berkshire (BRKA, Fortune 500) portfolio, and you’ll find signs that Buffett has thought hard about the impact of rising fuel costs. And he’s found some less direct — and probably less volatile — ways to make high prices work in his favor.
Last year, Buffett bought out railroad giant Burlington Northern. In his shareholder letter, Buffett points out that Burlington’s freight trains are three times as fuel efficient as trucks.
"An enormous part of our economy is getting stuff from here to there," says Meyer Shields, an analyst who covers Berkshire for Stifel Nicolaus.
And Buffett, adds Shields, is wagering that firms that help transport goods in a more fuel-efficient or cost-effective way will have a big competitive advantage no faxing 1 hour payday loans.
This thinking can be seen in other Buffett deals going back to his 1998 purchase of NetJets, which offers partial ownership of private jets — an option that’s more appealing than owning outright when transportation costs rise.
There’s the stake he recently took in BYD, a Chinese developer of plug-in electric-car technology.
And Berkshire’s MidAmerican Energy is a leader in wind power among regulated utilities.
Even Buffett’s recent deal to buy chemical manufacturer Lubrizol can be seen as an energy play. Part of Lubrizol’s business is making additives and lubricants for commercial engines. To the extent that its technology helps engines run more efficiently, its goods will be in more demand when energy prices spike, says analyst Michael Sison of Key-Banc Capital Markets.
Thinking like Warren
Individuals can’t mimic these bets on private companies or acquisitions — though you can, of course, buy Berkshire stock. (With the boss presumably nearing retirement, the shares carry less of a "Buffett premium.")
Or just learn from Buffett’s broad view: As you research stocks, one question to ask is how the company will fare if people are forced to economize on fuel.
You could find potential winners in sectors from tech (think telecommuting software) to retail (look at companies that manage their supply chains efficiently). You don’t have to load up on oil.
Singapore’s inflation held at 5 percent in March as housing and transportation costs surged, supporting the central bank’s decision this month to allow further currency appreciation.
The increase in the consumer price index matched the gain reported previously for February and the median estimate of 13 economists surveyed by Bloomberg News, a Department of Statistics statement showed today. Prices rose 0.1 percent from February, without adjusting for seasonal factors.
Asian central banks from China to Thailand and India are raising interest rates or allowing their currencies to gain to curb price pressures as oil and food costs rise. Singapore’s dollar has risen to records after the central bank said April 14 it would allow further appreciation in its third tightening of monetary policy in a year.
“Food inflation is rising despite a strong Singapore dollar while oil prices have continued to escalate despite the gradual stabilization in the Middle East and North Africa political crisis,” Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, said before the report. The “chance is high that inflation will remain stuck at an uncomfortably high range of 4.5 to 5.5 percent in the coming months before easing off in the second half of the year,” he said.
The Monetary Authority of Singapore, which uses the exchange rate as its main tool to manage inflation, said this month it will re-center the currency’s band upwards, a move economists including Seah said amounts to a one-off revaluation. Inflation may reach the upper end of the central bank’s 3 percent-to-4 percent forecast range this year, it said.
The Singapore dollar has gained more than 11 percent against the U.S. currency in the past year to be the best performer in Asia excluding Japan. It traded at S$1.2345 a dollar at 12:42 p.m. local time.
Consumer prices may rise faster in the coming months after Singapore Power Ltd., the island’s main electricity provider, increased tariffs for the April-to-June quarter by an average 6.5 percent because of higher oil costs.
Huge severance packages often make the news, but for most of us a six-figure golden parachute is about as likely as winning the lottery.
Even so, if you and your employer do part ways, there are ways to ensure that you can get as good a deal as possible. If you signed an employment contract when hired, it will typically set out how much you will receive if fired and how the money will be paid out , whether a lump sum or monthly payments. A collective agreement may do the same for union members.
Otherwise, you can expect an Ontario court to award you roughly one month of pay per year of service to a maximum of between 24 and 30 months. But depending on the specific facts, the remedy in each case can vary significantly.
For example, in Sanders v Chateau de Charmes Wines Lawrence Saunders, a 39 year old marketing director, was fired after 10 years and got 15 months of pay. The size of the award was due in part to a finding by the court that his manager was
A pay increase of A$234,000 ($252,000) at the height of the global financial crisis made Reserve Bank of Australia Governor Glenn Stevens one of the world’s highly-compensated central bankers.
The raise was agreed on by the bank’s board in October 2008 following a review by PricewaterhouseCoopers and the ending of performance bonuses, according to correspondence between the central bank and Treasurer’s office obtained by Bloomberg News under a Freedom of Information request.
Stevens’s 2010 total compensation was A$1.05 million, with an A$805,000 base salary that was 61 percent more than European Central Bank President Jean-Claude Trichet’s and four times that of Federal Reserve Chairman Ben S. Bernanke. Stevens was one of seven central bank chiefs from around the world to receive an ‘A’ grade in a September 2009 Global Finance Magazine survey for navigating their economies through the world’s worst financial crisis since the 1930s.
“Given the national significance of the governor’s position, the Board’s Remuneration Committee, and the board itself, discharges its responsibilities in this area in a disciplined manner,” Donald McGauchie, chairman of the remuneration committee and a member of the board until last month, wrote to Treasurer Wayne Swan explaining the decision.
Trichet, Shirakawa
Spokesmen in the Reserve Bank and Treasurer’s office declined to comment on the correspondence when contacted by Bloomberg News yesterday. Australian offices and markets are closed for the Easter holiday today.
Trichet was paid 367,863 euros ($537,300) last year, 2 percent more than his 2009 salary, according to the ECB’s annual accounts published in March. Bernanke earned $199,700, while Bank of Japan Governor Masaaki Shirakawa’s salary, at 34.4 million yen ($419,410) for the year to March 31, fell 1.5 percent from a year earlier.
Remuneration for Japan’s central bank governor has declined 10.8 percent over the past 10 years as the country grappled with deflation.
Stevens’s salary still trails that of Hong Kong Monetary Authority Chief Executive Norman Chan, who earned HK$7.5 million ($965,000), plus HK$868,000 in benefits last year, according to the HKMA’s annual report published yesterday.
Australia was one of the few economies to skirt the global recession as Stevens slashed the overnight cash rate target to a 50-year low of 3 percent. As the economy rebounded, he raised rates in seven quarter-percentage-point steps from October 2009 to November last year to 4.75 percent, the highest in the developed world.
Surpassing Gillard
The Reserve Bank forecasts Australia’s economy will expand 4.25 percent this year, driven by a mining investment boom and record job growth that helped spur the nation’s currency to the highest level since it was freely floated in 1983 cash advance flexible payments.
“The Australian economy overall has performed very well,” said Edwin Truman, a former director of the Fed’s international- finance division. “It was only mildly affected by the crisis.” The central bank “moved quite aggressively quite early in terms of liquidity support,” he said.
While central bank salaries “can be a political issue like everybody else’s in the financial sector,” the pay increase may be difficult to roll back for Stevens’ successors, said Truman, who’s now a senior fellow at the Peterson Institute for International Economics in Washington. “It’s hard for someone to say ‘I’m not worth that much,’” Truman said.
Stevens’s salary is more than double that of Prime Minister Julia Gillard’s base pay of A$355,264. In correspondence with McGauchie, Swan suggested the governor’s remuneration was too high.
In a letter dated Sept. 15, 2010, Swan said that in the future the Reserve Bank’s Remuneration Committee should “discharge its powers with an emphasis on ensuring that salaries are adjusted to be in line with community expectations of senior officials’ remuneration.”
Swan, in the letter, also said he was advised of the October 2008 decision to increase the governor’s salary in September 2009, “nearly one year after” the move.
Correspondence
The correspondence also included a letter to Swan from Jillian Broadbent, a central bank board member on the remuneration committee, expressing “serious concerns about the possibility that responsibility for the remuneration of senior officers of the Reserve Bank be moved away from the bank’s board.”
She said the current practice, adopted to address the acute staffing difficulties that the bank experienced in the 1980s as personnel were lured by higher-paying jobs in the finance industry, worked “very well” since it was established by then- Treasurer Paul Keating.
Under that framework, it recognized that the relevant comparisons for Reserve Bank remuneration aren’t mainstream government agencies but government business enterprises and other financial institutions.
“Attracting and retaining top financial talent into government in Sydney is a challenge,” she wrote in the letter dated Sept. 17, 2010. “Salary levels and the quality of the bank’s officers are interdependent.”
Swan, in a press conference earlier this month, said he understood community concern related to the governor’s salary, describing the issue as a “matter that’s before the government.”
The European Central Bank increased risks for the euro by raising interest rates too soon for a region that’s grappling with a debt crisis, according to Standard Life Investments.
The currency may tumble at least 16 percent to below its “fair value” of between $1.20 and $1.25, said Ken Dickson, investment director for currencies at the Edinburgh-based company, which oversees about 157 billion pounds ($256 billion).
“The euro is a particularly risky currency at these levels because the increasingly restrictive policy and the financial conditions are not really appropriate,” Dickson said in an interview. A series of rate increases “is not appropriate for the conditions or economics of Europe as a whole,” he said.
Investment strategists at Standard Life, Aberdeen Asset Management Plc and Scottish Widows Investment Partnership said last month the biggest risk to markets was the possibility of policy makers getting decisions wrong. While ECB President Jean- Claude Trichet said this month’s quarter-point increase in the refinancing rate wasn’t necessarily the start of a series, colleagues signaled more are to come.
Ewald Nowotny, an ECB governing council member and governor of Austria’s central bank, told Bloomberg News in Washington on April 16 that investor expectations that the rate will rise an extra 50 basis points in 2011 are “well-founded.” Belgian counterpart Luc Coene said on April 17 that monetary “conditions are too accommodative.”
Yo-Yo Rates
Dickson said at his office on April 18 it was “feasible” the ECB may raise the cost of borrowing by more than is justified by the outlook for the economy and inflation, and then be forced to cut rates again.
The ECB in Frankfurt lifted its main rate to 1.25 percent on April 7, the first increase since July 2008, as it sought to contain an inflation rate that exceeded its 2 percent target.
The central bank is trying to balance the need for tighter policy in countries including Germany, whose economy is booming, against the risk of exacerbating the debt crisis afflicting Greece, Ireland and Portugal. Inflation accelerated to 2.7 percent in March, the fastest since October 2008.
The euro has declined 0.7 percent against its nine most- actively traded peers since April 7, trimming this year’s gains to 3 percent, Bloomberg Correlation-Weighted indexes show. The euro’s value was at 101.1241, down from a 2011 high of 102.7109, reached on April 12. The euro traded at $1.4321 yesterday, up 7 percent since Dec. 31.
Policy ‘Fear’
Strategists in Scotland said at a discussion in Bloomberg’s Edinburgh office on March 23 that the timing of rate increases in developed economies, China’s accelerating inflation, the European debt crisis and the U.S. fiscal deficit all posed bigger threats to markets than higher oil prices.
“Our fear is that tightening policy, both from interest rates and through further appreciation in the euro is not the right economic formula for Europe at this time,” Dickson said. “We expect the euro to move to an undervalued position. It’s feasible that it could take longer than this year but we think the end of this year the clear direction of travel would be for the euro to weaken.”
Dickson advises Standard Life money managers on currency investments. The company boosted assets under management by 13 percent last year, while Aberdeen Asset Management Plc, the largest fund company in Scotland, increased its funds 27 percent to 183.3 billion pounds. Scottish Widows Investment Partnership lifted assets 3.2 percent to 146 billion pounds.
Europe’s debt crisis returned to haunt markets Monday as investors fretted over a possible Greek default and the impact of huge gains for a nationalist party in Finland.
It was also a day that Portugal began discussions on a financial bailout and Spain had to pay a much higher interest rates to tap bond investors.
Although borrowing costs for countries like Greece, Ireland and Portugal have risen sharply higher in recent weeks, the euro managed to brush off debt crisis concerns, hitting a 15-month high last week above $1.45. The currency has been buoyed by predictions that the European Central Bank will follow April’s first interest rate hike in nearly three years with more policy tightening.
That benefits the euro if investors don’t expect others, such as the Federal Reserve, to do the same.
However, there was little hiding place for the currency Monday amid a stream of negative developments, which sent the euro down 1.1 percent to $1.4255, its lowest level since April 7.
Further debt jitters emerged with the news that Spain had to pay sharply higher interest rates to raise euro4.7 billion ($6.7 billion) in short-term debt, while the yield on Greece’s 10-year bonds spiked nearly a whole percentage point at one stage to 14.59 percent. That’s the first time it’s gone above 14 percent since the country took up the euro in 2001.
By late European trading, the yield had eased slightly to 14.56 percent, but the difference with benchmark German bunds was over 11 percent _ a staggering differential given that the two countries use the same currency.
The renewed focus on Greece’s debts has come after some suggestions that the country would be better off looking for a way to renegotiate its debts.
Costas Simitis, Greece’s Socialist premier from 1996-2004, has backed calls for the country to deal with its debt mountain, arguing that a protracted austerity program may not work. A negotiated restructuring would be better, allowing Greece to rebuild its economy over the next 15 to 20 years, he argued.
He’s not the only one arguing for a restructuring but the Greek government insists that is not on the agenda, as it would make it more difficult to tap bond markets in the future.
The governor of Greece’s central bank weighed in Monday, arguing that a restructuring is “unnecessary and undesirable.” However, central banker George Provopoulos admitted that cost-cutting reforms by Greece’s Socialist government were showing signs of “fatigue” and required a “powerful restart” to keep the program on track.
Whether Greece can actually withstand the pressure is another matter _ after all, it spent the early part of 2010 insisting it didn’t need a bailout. By May, it had to accept a euro110 billion ($159 billion) package of rescue loans from its partners in the European Union and the International Monetary Fund.
“Despite public protestations to the contrary, the background chatter has reached such an intensity in recent days that the real questions now seem to be rather more when a Greek ‘restructuring’ will finally be announced and quite what the details will be rather than if there will be one,” said Simon Derrick, a senior analyst at The Bank of New York Mellon.
Although a restructuring would reduce the debt pile and possibly bring a quicker end to the painful austerity measures, restructuring would not be easy and would entail huge costs to Greece’s future ability to borrow money as well as risking a massive blow to the country’s banks, which are big holders of Greek bonds.
Many German and French banks are also big holders of Greek debt.
A Greek default could also trigger fears that Ireland or Portugal may seek a similar way out from their debt stranglehold. There had been hopes that Europe had finally done enough to ringfence its three weakest members, but those nations’ immediate economic prospects look bleak as they try to meet their obligations for the international financial support.
Portugal began its quest for financial assistance Monday with the finance minister of the country’s caretaker government meeting delegations from the European Commission, the European Central Bank and the International Monetary Fund. A key topic is expected to center on the interest rate charged for Portugal’s expected euro80 billion ($116 billion) bailout.
Meanwhile, news that a euroskeptic party made big gains in Finland’s election Sunday has stoked fears that the EU’s “comprehensive plan” to deal with the debt crisis may not run as smoothly as hoped.
True Finns leader Timo Soini suggested Monday that Finland should opt out of future bailout packages, decisions that require unanimity in the 17-member eurozone.
A bailout rescue without Finland would severely undermine the eurozone’s pledge to do everything to defend the common currency and could create panic on financial markets.
“The EU currently requires unanimous approval for each use of the eurozone bailout fund, so it is now being forced to examine ways to push through the Portuguese package without Finnish support,” said Jane Foley, an analyst at Rabobank International. “There is no time to lose since Portugal is facing a hefty bond redemption in June.”
One St. Louis company, Brown Shoe, characterized 2010 as the year of a “new normal” for executive compensation.
For Brown’s chief executive, and for a majority of other local CEOs, that new normal meant higher pay after two lean years. At 24 large public companies that have filed their pay disclosures for 2010, the median St. Louis CEO earned $5.2 million, a stunning 61 percent increase from the previous year.
Company profits improved in many cases, too, so boards can argue that they’ve successfully tied pay to performance. The biggest pay increases, though, had more to do with special circumstances than with performance.
David Farr of Emerson, the highest-paid CEO in St. Louis last year, saw his total compensation more than double to $24.8 million. Emerson did post a 25 percent profit increase, which earned Farr a bigger bonus, but two-thirds of his pay was in a performance stock grant that Emerson hands out once every three years.
Patrick Moore, No. 2 in pay at $19.1 million, received nearly $11 million in bonuses, some of which were related to the emergence of his company, Smurfit-Stone Container, from bankruptcy. He also benefitted from a $6.8 million increase in his pension value.
Closer to the median was Ronald Fromm, the CEO of Brown Shoe, who saw his total pay rise 97 percent last year to $6.4 million. The company says three-fourths of his pay is “at risk,” meaning that it’s tied to performance. Brown’s net income nearly quadrupled last year, although it wasn’t yet back to pre-recession levels.
Companies really mean it when they say they pay for performance, says Steven Hall, managing director at consulting firm Steven Hall & Partners in New York. “2010 was a year when profits rebounded quite a bit, and companies when they set their budgets maybe had expected life to not quite be that good,” he said.
There’s an art, after all, to setting bonus targets. Place the bar too low and you create a culture of entitlement. Place it too high and you get despair and discouragement. After a couple of down years, compensation committees apparently were more worried about executives becoming discouraged.
Build-A-Bear Workshop, for example, lost $12.5 million in 2009, and executives could have earned a bonus just for shrinking that net loss. As it turned out, the teddy-bear company earned $100,000, and that triggered a $566,038 bonus for CEO Maxine Clark.
As pay levels rise, so does the level of scrutiny given to executives’ compensation. This year, for the first time, all publicly traded companies must ask shareholders to vote on their pay practices.
As of early April, Hall says, ’say on pay” resolutions had passed at 223 companies and failed at five, including Hewlett-Packard and Jacobs Engineering.
The voting requirement, Hall says, is forcing firms to do a better job of explaining their pay practices. Some are also doing things like making stock grants forfeitable when performance lags, trimming severance packages and eliminating red-flag perquisites like country club dues.
Hall says the scrutiny should strengthen the link between pay and performance, but it probably won’t make CEO pay any less generous. And that’s where two types of pay critics start to diverge.
One group, which includes pension-fund and mutual fund managers, mainly wants corporate America to be well run. The other group, led by union leaders and politicians, just thinks CEOs are overpaid, period.
Higher pay that goes along with higher profits may be OK with the first group, but not the second. Criticizing the boss’s pay was fair game in the old normal, and it will be in the new normal, too.
India’s inflation accelerated more than economists estimated in March as the cost of fuel and manufactured goods rose, putting pressure on policy makers to raise interest rates in Asia’s third-largest economy.
The benchmark wholesale-price index rose 8.98 percent from a year earlier after an 8.31 percent gain in February, the commerce ministry said in a statement in New Delhi today. That exceeded all 28 estimates in a Bloomberg News survey, where the median forecast was for an 8.36 percent increase.
Expansion in India’s $1.3 trillion economy has boosted consumer demand and spurred manufacturing, car sales and credit growth, stoking price risks and prompting the central bank to raise rates eight times since early 2010. Inflation in the first quarter has exceeded the Reserve Bank of India’s forecast that price increases would be 8 percent by the end of March this year.
“Inflation is going to remain uncomfortably high this year,” said Leif Eskesen, Singapore-based chief economist at HSBC Holdings Plc. “The RBI needs to raise rates more aggressively and we are looking at three more rate increases this year.”
The Bombay Stock Exchange’s Sensitive Index extended declines after the inflation report, falling 1.4 percent at 11:52 a.m. in Mumbai. The yield on the 8.08 percent bond due in August 2022 was at 8.25 percent, compared with 8.21 percent before the data was published.
Rate Increase
Rising oil and commodity costs and sustained economic growth are escalating pressure on Asian central banks to boost borrowing costs. China on April 5 raised rates for the fourth time since mid-October. Vietnam, Taiwan, South Korea and Thailand also increased borrowing costs this year to curb inflation, and Singapore said yesterday it would allow further currency gains.
China’s economy grew a more-than-estimated 9.7 percent in the first quarter and inflation accelerated in March to the fastest pace since 2008, with consumer prices rising 5.4 percent from a year earlier, a report showed today.
Reserve Bank Governor Duvvuri Subbarao on March 17 increased the repurchase rate by a quarter point to 6.75 percent after raising the inflation forecast for the second time since late January, when he estimated it at 7 percent by March end. The central bank’s next monetary policy announcement is scheduled for May 3.
Food Inflation
“In the absence of a strong supply response, increasing demand will inevitably lead to higher prices,” Reserve Bank Deputy Governor Subir Gokarn said April 5. He said a “monetary response is warranted” should demand exceed supply and stoke inflation.
Manufactured-products inflation was 6.21 percent in March, compared with 4.94 percent in February, today’s report showed. Fuel and power prices rose 12.92 percent, compared with 11.49 percent the previous month. India relies on imports to meet three-quarters of its annual energy needs.
Food prices rose 8.28 percent in the week to April 2, compared with 9.18 percent in the previous week, the commerce ministry said in a separate report today.
India’s economy may expand as much as 9.25 percent in the year ending March 31, 2012, the finance ministry said in February.
Production Growth
Still, India’s industrial production growth unexpectedly slowed to 3.6 percent in February, a report showed this week.
“Even as industrial production continues to be volatile, other indicators, such as the latest purchasing managers’ index, direct and indirect tax collections, merchandise exports and bank credit, suggest that the growth momentum persists,” the central bank said in the March 17 statement.
India’s industrial output has fluctuated since May, when it registered a 12.2 percent expansion. The growth eased to 7.2 percent in June, rebounded to 15.1 percent in July, slid to 4.9 percent in September and then recovered in October, according to government data.
Recent data show lenders are giving loans at a faster pace than the central bank’s target. Commercial loans rose 21.4 percent from the previous year as of March 25, more than the 20 percent rate prescribed by the Reserve Bank of India.
Rising Salaries
Manufacturing grew for a 24th straight month, with the purchasing managers’ index holding unchanged at 57.9 in March from February, when it accelerated at the fastest pace in three months, HSBC Holdings and Markit Economics said April 1.
Salaries in India this year may rise the most in the Asia- Pacific region, fueling consumer demand, a survey by Aon Hewitt LLC showed March 8. Spending under the government’s National Rural Employment Guarantee Act of 2005 has surged almost fourfold to 399 billion rupees.
Demand may find more support from Finance Minister Pranab Mukherjee’s budget for the fiscal year ending March 31, 2012, which plans to spur spending and exempt incomes below 180,000 rupees from tax, higher than the previous threshold of 160,000 rupees.
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