Economic activity in India picked up speed last month, signaling it was well on its way to recovery before a new wave of coronavirus infections derailed progress. The needle on a dial measuring so-called animal spirits rose a notch for the first time in six months in March, based on the three-month weighted average numbers of eight high-frequency indicators tracked by Bloomberg News.
As last month’s score – helped by faster exports and improved liquidity – confirms strong performance in the January-March quarter, new activity is dragging its feet amid the world’s worst Covid-19 outbreak in India deserves a real-time reading of the indicator economy.
A basket of high-frequency, alternative and market indicators indicated a sharp decline in service activity in the week to April 25, Abhishek Gupta, Indian economist at Bloomberg Economics, said on Wednesday.
Here is more data from India that is worth following in the days to come:
Goods and Services Tax data released by the Ministry of Finance around the first week of each month is a key indicator of consumer activity
IHS Markit Purchasing Manager Surveys, Also Released Next Week, Will Provide Insight into Manufacturing and Services Activity
Auto sales published by companies such as Maruti Suzuki India Ltd. and Hero MotoCorp Ltd. the first day of each month serves as an early indicator of demand, before industry figures are released by the Society of Indian Automobile Manufacturers.
Unemployment rate for April from private research firm Center for Monitoring Indian Economy Pvt. will also be available early next week, serving as a window into the labor market in the absence of official real-time data
Google’s electricity consumption and mobility trends will also show real-time consumption trends, a sector that accounts for around 60% of the economy.
Here are the details of the Animal Spirits Dashboard:
Activity in India’s dominant service sector moderated in March after increasing the previous month at its fastest pace in a year. The IHS Markit India Services PMI fell from 55.3 to 54.6, with a reading above 50 signaling growth. A similar survey for the manufacturing sector also showed moderate expansion.
Exports are up more than 60% from a year ago, with engineering products, gemstones and jewelry, drugs and pharmaceuticals and chemicals leading shipments. Merchandise imports also rebounded smartly in March, increasing 53.7% from a year ago, on the back of a pickup in domestic economic activity.
Sales of passenger vehicles more than doubled from a year ago, to 291,000 units in March, according to data from SIAM. Two-wheeler sales amounted to 1.5 million units, up from 867,000 last year.
This optimism was tempered, however, by the slowdown in demand for loans. Bank credit rose 5.6% in March from a year earlier, from 6.6% in February, according to central bank data. Liquidity conditions improved somewhat, with the banking system in surplus, despite anticipated tax outflows during the second half of March.
Industrial production contracted 3.6% in February from a year earlier, reflecting a slowdown in most sectors. The only bright spot was consumer durables, which posted surprisingly strong growth, helped by a weaker base.
Production of infrastructure industries, which accounts for 40% of the industrial production index, also fell 4.6% in February from a year ago, with a drop in cement production leading the way. . Both data are published with a one month lag.
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