Economy

The writer is a former central banker and a professor of finance at the University of Chicago’s Booth School of BusinessIn his testimony to Congress earlier this week, Federal Reserve chair Jay Powell indicated “the ultimate level of interest rates is likely to be higher than previously anticipated” and “restoring price stability will probably require that we maintain a restrictive stance for some time”. This was the tough Fed on display, and markets accordingly tanked. Yet a few weeks earlier, Powell had set the financial markets off to the races when he said, “We can now say, for the first time, the disinflationary process has started.” Financial markets, used to years of easy money, celebrate at the slightest indication that the Fed will soften policy, making its task harder. Yet they are not the only market that is not currently co-operating.Labour markets have, if anything, become even tighter, despite the Fed raising interest rates by 450 basis points since last March, and Friday’s strong jobs numbers did not alleviate concerns. While goods production is slowing after the pandemic increased consumption significantly, services, which are more labour-intensive, are now picking up strongly. Workers are hard to find, especially when it comes to hospitality and leisure. One reason is that the labour force is missing 3.5mn workers relative to pre-Covid projections. Older workers understandably quit during the pandemic, and many did not return. Retirements still continue at an accelerated pace. And tragically, as Powell pointed out, Covid-19 also ended the lives of half a million workers in the US, while a slower rate of immigration has led to about a million fewer workers than expected.In addition, given the difficult nature of jobs in leisure and hospitality, workers have sought opportunities elsewhere in the economy. And perhaps as importantly, companies have been holding on to their staff precisely because hiring has been so hard. Until they are confident that the economy will slow down and they will not need these workers, and also perhaps until they see enough unemployment around them to signal that hiring will not be difficult in the future, labour hoarding may continue. Other markets are also treading water. For instance, US house sales have slowed considerably, but property prices have generally held up, probably because there is not much supply entering the market. With mortgage rates having risen by so much over the past year, a homeowner with a 30-year mortgage at 4 per cent will have to shell out much more in monthly payments if she upgrades to a slightly better house with a new mortgage at 7 per cent. Because she cannot afford to buy, she does not sell. And because this is limiting the supply of homes on the market, there is only modest downward pressure on prices. Finally, inflation has been trending down because pandemic-induced supply chain disruptions and war-induced commodity supply disruptions are now being sorted out. Beliefs in a painless “immaculate disinflation” and soft landing lead to a self-reinforcing equilibrium, in which few believe the Fed will have to do much more. As a result workers are not being laid off, financial asset prices and housing are holding up, and households have the jobs and wealth to keep spending. But without some slack in the labour market, the Fed cannot feel comfortable pausing its efforts.To get the job done, therefore, the Fed has to force markets to abandon their belief that disinflation will involve only mild job losses. Indeed a recent study by Stephen Cecchetti and others suggests that every disinflation since the 1950s has involved a significant rise in unemployment.There are dangers in the Fed taking a soft landing with mild job losses off the menu of possible outcomes. The first, evidenced by the questioning Powell underwent during his Congressional testimony, is that politicians will be irate if the Fed torpedoes a recovery they have just bought with trillions of dollars in fiscal spending. The central bank is not immune from Congressional wrath.Second, the benign equilibrium may turn into a vicious one. The markets could have their Wile E. Coyote moment. Lay-offs may spur more lay-offs now that businesses are confident they can hire back if necessary. In turn, laid-off employees may be forced to sell their houses, depressing property prices and reducing household wealth. Unemployment and lower wealth may hurt household spending, which will in turn depress corporate profits. That will lead to more lay-offs, falling financial markets and financial sector stress, and yet more muted spending . . . We may end up with a deeper recession than currently anticipated because it is hard to get just a little unemployment.Of course, the Fed could then revive the economy by cutting rates, but it will need to be wary of doing so until it sees enough slack build up in the labour market. If it turns too fast, markets will celebrate and the job will be left unfinished. But if it waits until there is sufficient slack, lay-offs could develop a momentum of their own.The temptation then is for the Fed to be more ambiguous, keep a soft landing on the menu and pray for an immaculate disinflation. If so, the Cecchetti study warns that the eventual unemployment needed to rein in inflation could be much higher. The Fed’s only realistic options may be a hard landing and a harder landing. It may be time for it to choose. More

The UK’s leading supermarkets have formed a task force that will fund independent audits on British farms after investors called on food retailers to eliminate the risk of worker exploitation in their supply chains.The move from grocers including Tesco, Sainsbury’s, Ocado and Waitrose, follows widespread reports that Asian agricultural workers had come to the UK after paying exorbitant fees to hiring agencies in their home countries, leaving them effectively working to pay off debts. The grocers told suppliers last week that they will fund audits of the UK-based recruitment companies licensed to hire seasonal labourers, which will involve surveys of workers on farms, according to a letter seen by the Financial Times.Stronger Together, the ethical recruitment group leading the audit process, confirmed that the aim is to assess the recruitment process by UK agencies and their counterparts abroad, rather than conditions on the farms themselves.The supermarkets, which also include Aldi, Co-op, Asda and Morrisons, said in their letter that “the task force is working to develop and implement tangible actions to help mitigate risks of worker exploitation” and “to improve worker welfare”.The controversy surrounding migrant farm workers has added to pressure on UK businesses and the government as they face a shortage of foreign workers. Growers, which in the past relied on temporary workers from Europe, have been forced to look farther east post-Brexit and since Ukraine was invaded by Russia. Campaigners have warned that labourers from Nepal and Indonesia, who made up 18 per cent of seasonal workers in 2022 up to August, would struggle to pay back loans that they took out after being charged thousands of pounds by recruiters in their home countries. As a result, British recruiters for the seasonal worker scheme have now ruled out hiring from these Asian countries, deepening the risk of labour shortages this year.In December, investors with £800bn in assets, including shareholders in big supermarkets, called on retailers to eliminate the risk of exploitation and ensure workers are repaid the millions that they are estimated to have collectively spent to secure jobs. This followed a report by the Independent Chief Inspector of Borders and Immigration that found the government “did not act promptly or seriously” when workers reported “serious concerns”. Debt bondage is recognised by the International Labour Organization as an indicator of forced labour, and the charging of recruitment fees is opposed by UN principles backed by the UK.The efforts by the supermarkets “cannot and shouldn’t replace the government’s role”, said Andy Hall, an independent activist who has campaigned on issues around the seasonal worker scheme. “The fact [that the private sector is arranging audits] is a good thing in response to the government’s lack of action.” He added, however, that his focus was “the remediation [of former workers]”.

Sophie De Salis, sustainability policy adviser at the British Retail Consortium, which represents the supermarkets, said that retailers are “committed to upholding high standards of welfare for all people who work in their supply chains”.But she said that supermarkets needed an intervention from the government and licensed recruiters to address the “systemic challenges within the design, operation and enforcement of the seasonal worker scheme” and to “better protect workers vulnerable to illicit recruitment fees”.A government spokesperson said that the welfare of workers “is always of paramount importance for us”. They added that the government works closely with the licensed recruiters “who have responsibility for ensuring the welfare of migrant workers, preventing zero hour contracts and managing the recruitment process overseas”. They said the government “will always take decisive action” if these recruiters do not meet its conditions. More

Today’s top storiesThe UK economy bounced back a better than expected 0.3 per cent in January, fuelled by growth in the services sector. The UK is still the only G7 economy that has not yet recovered to pre-pandemic levels but Prime Minister Rishi Sunak said confidence was returning. European Commission chief Ursula von der Leyen and US president Joe Biden are meeting today for talks on the critical minerals used in electric batteries. Brussels yesterday cleared the way for a subsidy race with the US over crucial technologies, allowing EU member states to “match” its multibillion-dollar incentives. US energy secretary Jennifer Granholm used an FT interview to try to ease tensions. A sell-off in US bank shares spread to Europe, with Deutsche Bank, Société Générale and HSBC all falling. Investors dumped shares in the biggest US banks on Thursday as investors fretted about the value of banks’ bond portfolios and falling deposits after difficulties were highlighted at Silicon Valley Bank, a small, technology-focused lender.For up-to-the-minute news updates, visit our live blogGood evening.US jobs growth in February was higher than expected, even as wage growth cooled, complicating the way forward for the Federal Reserve and its programme of interest rate rises.The 311,000 new posts were fewer than January’s 504,000 but higher than the anticipated 220,000, while the unemployment rate of 3.6 per cent remains close to a multi-decade low. Wage growth was up 0.2 per cent from January and on a year-by-year basis by 4.6 per cent.

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Fed chief Jay Powell suggested this week bigger rate rises might be necessary to cool the economy, telling Congress he would be watching today’s jobs figures closely, alongside inflation and retail sales figures due next week.Today’s data follows President Joe Biden’s unveiling of budget proposals yesterday, outlining tax increases to fund Democratic priorities such as healthcare spending, with a goal of shaving $3tn off the US deficit. Biden’s wishlist includes a 25 per cent minimum tax on billionaires, a 28 per cent corporate tax rate, and a doubling of the tax rate on US multinationals’ foreign earnings, as well as a quadrupling of the tax rate on corporate share buybacks.Republicans are likely to block the plans, calling instead for cuts in government spending ahead of a looming battle over the debt ceiling. The Congressional Budget Office warned last month that the government risked defaulting on its debt as soon as July.The budget hoo-ha comes at a critical point for the US economy as it struggles to contain the surge in inflation. Biden and the White House increasingly see the battle of economic ideologies as central to the 2025 presidential race but, as inflation proves harder to root out than expected, polls showing Americans disapprove of his handling of the economy are only likely to get worse.Need to know: UK and Europe economyThe UK is planning to fill some of the country’s 1.2mn vacancies by opening the doors to more foreign workers, starting with the construction industry. A new survey found the UK’s estate agents at their most gloomy since 2009, with many houses being sold for below their asking price.The head of L&G, one of Britain’s largest insurers, bemoaned the “perpetual drift” of companies away from London’s stock market and described the country as a “low-productivity, low-growth, low-wage economy fraught by political infighting”. Higher CEO pay is one reason companies are opting to list in New York, notes the Lex column.The European Central Bank told major lenders in the eurozone to run cyber stress tests after a “significant increase” in hacker attacks since the outbreak of the war in Ukraine. German states are rethinking their use of software from US data group Palantir over privacy concerns.Need to know: Global economyXi Jinping was confirmed for an unprecedented third time as China’s president. The announcement of a third term completes a process Xi started in 2018 by abolishing two-term limits, allowing him to rule for life if he chooses.Saudi Arabia and Iran ended their seven-year rift and restored diplomatic ties as part of a Chinese-mediated deal to ease tensions in the oil-rich region. The war in Ukraine and the pandemic have together achieved what decades of Japanese central bankers have struggled to do: boost prices in a stagnant economy. Here’s Japan’s inflation story characterised by the price growth of three everyday items.Tunisian president Kais Saied said he would dissolve local authorities in a new power grab, just as doubts over a critical $1.9bn IMF loan deal deepened its economic crisis. Need to know: businessApple and its manufacturing partner Foxconn were among the companies behind an important liberalisation of labour laws in the Indian state of Karnataka last month. The reforms enable two-shift production, similar to the two companies’ practices in China. TikTok and Meta content moderators in Germany have joined forces to demand better working rights through a set of conditions to be presented to social media networks next week. The partnership is the first of its kind on the continent and could lead to other social media tie-ups. The US has privately reassured some of the world’s largest commodity traders that they are OK to ship price-capped Russian oil to keep supplies stable and regain some oversight of Moscow’s exports.Chinese AI groups are skirting export controls to access high-end US chips through intermediaries, revealing potential loopholes in Washington’s blockade of cutting-edge technology to the country. Gamblers are returning to Macau, the only part of China where punters can bet in casinos, now Beijing has ditched its zero-Covid policy. Exhibition group Informa warned that events in China would not recover until 2024.Science round-upScientists warned a global conference on human genome editing that urgent action was needed to cut the cost of gene treatments for once incurable diseases.Biotechnology has quietly become Americans’ latest national security concern, writes Chris Miller, author of Chip War, as the ability to apply huge computing power to DNA raises fears of biological warfare. Science commentator Anjana Ahuja says changing human DNA brings hope for treating diseases but raises concerns such as equitable access.Leading medical and scientific bodies in the US have joined together to fight “an infodemic of misinformation and disinformation” on health, spread mainly through social media and worsened by the coronavirus pandemic.Lengthy security checks for international students and staff are dissuading top scientific talent from coming to the UK and jeopardising research projects, universities warned. Investment is pouring into “neurotechnology”, which can record and analyse electrical impulses from the nervous system. But who has access to our brain data, and what they’re doing with it, should concern us all, writes columnist Camilla Cavendish.Our Tech Tonic podcast discusses Q-Day, when a quantum computer will be built that can break the encryption of the internet.Some good newsSome timely research in the week of International Women’s Day. A new study adds to existing evidence that advances in women’s rights benefit everyone. Something for the weekendThe FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not try today’s cryptic crossword? More

Market pricing Friday morning shifted back toward the probability of a quarter-point interest rate hike this month from the Federal Reserve.
A smaller-than-expected wage increase and the implosion of Silicon Valley Bank appear to have changed traders’ minds.

A trader works on the floor during morning trading at the New York Stock Exchange (NYSE) on March 10, 2023 in New York City. 
Spencer Platt | Getty Images

It seemed like only yesterday that markets were sure that a tougher Federal Reserve was going to raise its benchmark interest rate a half percentage point at its meeting in less than two weeks.
That’s because it, in fact, was yesterday. On Thursday, traders in the futures market were almost certain the Fed would take a more hawkish monetary policy stance and double up on the quarter-point hike it approved last month.

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But one bank implosion and a cooperative jobs report later, and the market has changed its mind.
The probability of a 0.25 percentage point increase rose above 70% at one point in morning trading, according to the CME Group, indicating that a momentary bout of Fed-induced panic had passed.
“In all, the data do not argue for a 50 [basis point] rate hike by the Fed on March 22 despite the strong payroll advance,” said Kathy Bostjancic, chief economist at Nationwide.
Nonfarm payrolls increased by 311,000 in February, well ahead of the Wall Street estimate for 225,000 but still a step down from January’s 504,000.
Perhaps more important, average hourly earnings rose just 0.24% for the month, a 4.6% year-over-year gain that was below the 4.8% estimate. That’s a critical metric for the inflation-fighting Fed that no doubt eyed Friday’s Labor Department report as closely as it will be watching next week for consumer and producer prices in February.

“The Fed can take comfort in the rise in the supply of labor and the easing of upward pressure on wages to maintain a 25 [basis point] rate increase,” Bostjancic added. A basis point is 0.01 percentage point.
Economists at both Bank of America and Goldman Sachs concurred, saying Friday morning that they are standing behind their forecasts for a quarter-point hike at the March 21-22 meeting of the Federal Open Market Committee. Both banks used the phrase “close call” on their outlooks, noting that the upcoming week of data will play a big role in the final Fed decision.
“The February report was overall on the softer side,” Michael Gapen, chief U.S. economist at Bank of America, said in a client note. “While payrolls topped our expectations, the rise in the unemployment rate and relatively weak average hourly earnings data point to a little better balance between labor supply and demand.”
What made the shift to 25 basis points notable was that at one point Thursday the outlook for a 50 basis point move was above 70%, as gauged by the CME’s FedWatch gauge of trading in federal funds futures contracts. That came following remarks from Fed Chairman Jerome Powell, who told Congress this week that if inflation data didn’t ease, the central bank likely would push rates faster and higher than previously expected.
However, that pricing began to come in during a sharp slide in the stock market and fears that the collapse of Silicon Valley Bank could be indicative of contagion in the financial sector. The shift towards the quarter-point probability became more pronounced Friday morning, though trading was volatile and the half-point move was gaining more momentum.
“The move down on 50 basis point odds was hard to separate from the collapse of SVB,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “That has to be in the thinking of Fed: Is this the thing that’s breaking?”

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The unemployment rate for Black and Hispanic women rose in February, but so did the number of eligible adults looking for jobs.
Black women saw their unemployment rate jump to 5.1% from 4.7%. Among Hispanic women, it jumped to 4.8% from 4.4%.
Both groups saw their labor force participation rates rise.

Women walk past by a “Now Hiring” sign outside a store on August 16, 2021 in Arlington, Virginia.
Olivier Douliery | AFP | Getty Images

The unemployment rate for Black and Hispanic women rose in February, but so did the number of people looking for jobs.
The U.S. unemployment rate ticked up to 3.6% in February from 3.4% the prior month, according to the U.S. Bureau of Labor Statistics on Friday. Women aged 20 and over in the labor force tracked that move, with the unemployment rate rising slightly to 3.2% from 3.1%.

The difference is more stark among Black and Hispanic women. Black women saw their unemployment rate jump to 5.1% from 4.7%. Among Hispanic women, it jumped to 4.8% from 4.4%.

Both groups saw their labor force participation rates — a metric that shows how many workers are employed or in search of work — rise.
For Black women, it jumped to 63% from 62.6%, while the employment-population ratio that shows the proportion of people employed ticked slightly higher to 59.8% from 59.7%. For Hispanic women, the labor force participation rate rose slightly to 61.3% from 61.1%, while the employment-population ratio stayed unchanged at 58.4%.
That could suggest broader weakness in the labor market even amid a stronger-than-expected jobs report, according to AFL-CIO chief economist William Spriggs. In February, the U.S. economy added 311,000 payrolls, though the unemployment rate ticked up and wages rose slightly.
“The Federal Reserve has characterized the labor market as, ‘Oh, the labor market is so tight, employers can’t find anybody,’ but women went out, they looked, and some of them did get jobs, but a lot of them didn’t,” Spriggs said.

“So obviously, there’s a lot more workers than available jobs. And there’s a lot of room left in the labor market to recover,” he added.

Still, Valerie Wilson, director at the Economic Policy Institute’s program on race, ethnicity and the economy, urged against putting too much stock into one month’s report, noting that the rising labor force participation rate shows more confidence in the labor market.
She attributed lower employment among Black women to a slower recovery in the public sector, which employs a more significant share of Black workers in education. Meanwhile, leisure and hospitality continues to recover from losses during the pandemic, which boosts employment among Hispanic women.
Wilson pointed out an upbeat finding in this latest payrolls report.
“One of the bright spots or positive things in this report in terms of women’s employment is that, again, looking at industries that employ a significant number of women, we saw increased employment in those,” said Wilson, citing rises in health care, government, retail, leisure and hospitality sectors.
“So the fact that those industries are still adding jobs suggests to me that there are continuing to be additional employment opportunities for women at least as far as the demographics of those industries are concerned,” she said.
-CNBC’s Gabriel Cortes contributed to this report.

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Leisure and hospitality has been consistently one of the strongest sectors as the U.S. economy has recovered from the peak of the Covid-19 pandemic.
Restaurants and bars accounted for 70,000 job gains last month.
However, the sector is still 2.4% below its pre-pandemic employment level, according to the Labor Department.

The U.S. labor market surprised to the upside yet again in February, powered by continued strength in the service sectors of the economy.
The leisure and hospitality sector added 105,000 jobs last month, according to the Labor Department, accounting for roughly a third of the total 311,000 jobs gain.

The health care and social assistance segment was another large contributor, adding nearly 63,000 jobs.
Leisure and hospitality has been consistently one of the strongest sectors as the U.S. economy has recovered from the peak of the Covid-19 pandemic, which saw bars and restaurants close in large numbers across the country. Food and drink businesses accounted for 70,000 job gains last month.
However, the sector is still 2.4% below its pre-pandemic employment level, according to the Labor Department.
“We’re still short,” said Steve Rick, chief economist for CUNA Mutual Group. “We still don’t have the same amount of people working at hotels and restaurants as we did in 2019. So that’s why we’re still adding jobs at a pretty feverish pace in those areas.”
However, there are some weaknesses in other parts of the economy. The 25,000-job decline in information technology shows the impact of layoffs at tech companies, while transportation and manufacturing jobs also retreated.

Transportation and warehousing jobs are now down 42,000 since October, according to the Labor Department.
“We’re seeing a bifurcation of the economy between the goods and services sector,” Rick said.

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Nonfarm payrolls rose by 311,000 in February, above the 225,000 Dow Jones estimate.
The unemployment rate increased to 3.6%, above expectations.
Average hourly earnings climbed 4.6% from a year ago, less than expected, in a positive sign for inflation.
Leisure and hospitality, retail, and government led job creation by sector.

Job creation decelerated in February but was still stronger than expected despite the Federal Reserve’s efforts to slow the economy and bring down inflation.
Nonfarm payrolls rose by 311,000 for the month, the Labor Department reported Friday. That was above the 225,000 Dow Jones estimate and a sign that the employment market is still hot.

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The unemployment rate rose to 3.6%, above the expectation for 3.4%, amid a tick higher in the labor force participation rate to 62.5%, its highest level since March 2020.
The survey of households, which the Bureau of Labor Statistics uses to compute the unemployment rate, showed a smaller 177,000 increase. A more encompassing unemployment measure that includes discouraged workers and those holding part-time jobs for economic reasons rose to 6.8%, an increase of 0.2 percentage point.
There also was some good news on the inflation side, as average hourly earnings climbed 4.6% from a year ago, below the estimate for 4.8%. The monthly increase of 0.2% also was below the 0.4% estimate.

Though the jobs number was stronger than expectations, February’s growth represented a deceleration from an unusually strong January. The year opened with a nonfarm payrolls gain of 504,000, a total that was revised down only slightly from the initially reported 517,000. December’s total also was taken down slightly, to 239,000, a decrease of 21,000 from the previous estimate.
Stocks were mixed after the release, while Treasury yields were mostly lower.

“Mixed is an apt descriptor. There’s something for everybody in there,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “We’re still in a recession for certain parts of the economy.”
The jobs report likely keeps the Fed on track on raise interest rates when it meets again March 21-22. But traders priced in less of a chance that the central bank will accelerate to a 0.5 percentage point increase, dropping the likelihood to 48.4%, or about a coin flip, according to a CME Group estimate.
“Perhaps the best news from this report was the easing of wage pressures,” said John Lynch, chief investment officer at Comerica Wealth Management. “A drop in the largest costs for businesses is a welcome development. Nonetheless, 50 basis points is still on the table for the March policy meeting, given recent economic strength and dependent on next week’s [consumer price index] report.”
Leisure and hospitality led employment gains, with an increase of 105,000, about in line with the six-month average of 91,000. Retail saw a gain of 50,000. Government added 46,000, and professional and business services saw an increase of 45,000.

But information-related jobs declined 25,000, while transportation and warehousing lost 22,000 jobs for the month.
“It’s no longer accurate to say without reservation that the labor market is a bright spot in the economy. From 35,000 feet, the picture still looks sterling, but digging an inch beneath the surface, there are clear pockets of softening,” said Aaron Terrazas, chief economist at jobs review site Glassdoor.
Terrazas noted that hiring has slowed in “risk-sensitive” sectors. He added that, “The challenge for policymakers is that these weak points are a small part of the overall economy, but potentially have linkages lurking that have yet to emerge.”
The jobs report comes at a critical time for the U.S. economy, and consequently for Fed policymakers.
Over the past year, the central bank has raised its benchmark interest rate eight times, taking the federal funds rate to a range of 4.5%-4.75%.
As inflation data appeared to cool toward the end of 2022, markets expected the Fed in turn to slow the pace of its rate hikes. That happened in February, when the Federal Open Market Committee approved a 0.25 percentage point increase and indicated that smaller hikes would be the case going forward.
However, Fed Chairman Jerome Powell this week told Congress that recent metrics show inflation is back on the rise, and if that continues to be the case, he expects rates to increase to a higher level than previously expected. Powell specifically noted the “extremely tight” labor market as a reason why rates are likely to continue rising and stay elevated.
He also indicated that the increases could be higher than the February hike.
Though Powell emphasized that no decision has been made for the March FOMC meeting, markets recoiled at his comments. Stocks sold off sharply, and a gulf between 2- and 10-year Treasury yields widened, a phenomenon known as an inverted yield curve that has preceded all post-World War II recessions.
Correction: The unemployment rate rose to 3.6%, above the expectation for 3.4%. An earlier version misstated the direction in relation to the estimate.

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NEW DELHI (Reuters) – India’s industrial output rose a bigger than expected 5.2% in January compared with the same month last year as strong domestic urban demand boosted electricity generation and manufacturing, despite weakening exports.Analysts in a Reuters poll had predicted an increase of 5% in industrial output for the month. The rise followed upwardly revised annual growth of 4.7% in December, according to the Ministry of Statistics data.Some economists expect industrial output growth to remain strong following a recovery in rural demand as reflected in rising sales of autos including motor-bikes and scooters.India’s industrial output, comprising production by factories, electricity generation and mining, has been impacted by slowing global demand and rising interest rates in recent months. India’s industrial output on the rise https://www.reuters.com/graphics/INDIA-ECONOMY/INDUSTRIALOUTPUT/zdvxdxzjbvx/chart.png Manufacturing, which accounts for about 15% of the Indian economy, has also been hit by a fall in exports but rose 3.7% year-on-year overall in January. India’s merchandise exports in January fell 6.6% year-on-year to $32.91 billion.The Reserve Bank of India has raised its benchmark interest rate by 250 basis points since last May to contain inflation, pushing up borrowing costs for consumers and businesses.Capital goods production, a proxy for factory activity, rose 11% year on year, accelerating from a 7.6% rise the previous month, while consumer durables’ production contracted 7.5% year-on-year after a 10.4% contraction the previous month, the data showed, reflecting a continuing slowdown in consumer demand.Production of textile garments, tobacco products, basic metals and chemicals contracted between 7% and 30% in January from a year earlier, data showed, while mining output rose 8.8%, slower than 9.8% growth the previous month.India’s total passenger vehicle sales grew 11% in February from a year earlier, separate data released by the Society of Indian Automobile Manufacturers (SIAM) on Friday showed.India’s economy, the world’s fifth-largest, grew 4.4% year-on-year in the fourth quarter, down from 6.3% the previous quarter, and the government expects the economy to post annual growth of 7% for fiscal 2022/23 ending this month. More