Contraction in both the manufacturing and services sectors, which contribute more than two-thirds of India’s GDP, pulled the needle on the overall activity indicator from 6 to 5, a level not seen since February and The first drop came since the May 2020 figures. The gauge uses a three-month weighted average to smooth out volatility, and a move to the left signifies a loss of momentum.
While the deadly second wave of Covid-19 has subsided, the economy is facing a bumpy ride given the slow pace of vaccination and the threat of another wave. Abhishek Gupta, India economist at Bloomberg Economics, said in a report published on Tuesday that a basket of high-frequency, alternative and market indicators such as retail activity and road congestion are not showing the kind of strong recovery that was expected.
Here are more India figures coming in the coming days:
* Goods and Services Tax figures released by Finance Ministry A leading indicator of consumption is around the first week of every month.
* Auto sales published by companies such as Maruti Suzuki India Limited and Hero MotoCorp Ltd. on the first day of every month acts as an indicator of consumer demand.
* A survey of purchasing managers by IHS Markit beginning next month will offer an early glimpse of manufacturing and service activity.
* July unemployment rate from research firm Center for Monitoring Indian Economy PVT will be out early next week, offering a window on the labor market in the absence of real-time official data.
*reserve Bank of India Decision on interest rate on August 6
Here are the details of the dashboard for June:
Business Activity
A contraction deepened in India’s services sector as localized restrictions to control the virus hurt consumer demand and business activity. The Markit India Services Index declined last month to 41.2 from 46.4 in May, indicating a contraction below 50. A similar survey also pointed to shrinking activity in the manufacturing sector, both of which dragged the overall index deeper into contraction territory.
export
Exports grew 48.3% year-on-year in June, up 69.4% year-on-year in May, aided by stagnant global demand. Foreign demand for engineering goods and chemical products was helped, as did shipments of agricultural produce.
consumer activity
Retail auto sales, a bellwether of consumer demand, recovered, according to Kenichi Ayukawa President Kenichi Ayukawa, although the industry was facing hurdles such as a steep rise in commodity prices, semi-conductor shortages and fears of a third wave. . Society of Indian Automobile Manufacturers. Nevertheless, sales of motorcycles and two-wheelers registered an improvement in June, with the impact of the second wave on the slowdown in rural demand. The tractor segment also improved last month, with prospects of a better monsoon helping the sentiment.
Bank credit grew by 5.8% in June from a year earlier, from the 6% annual expansion seen at the end of May, data from the central bank showed. Liquidity conditions remained smooth, the banking system was in surplus.
industrial activity
Industrial output expanded, but at a slower pace, rising 29.3% in May from a year earlier, compared to around 135% in April. More importantly, industrial output fell 8.0% month-on-month since April, said Gupta of Bloomberg Economics, citing the lockdown that shut retail.
Similarly, output in infrastructure industries, which account for 40% of the Index of Industrial Production, expanded 16.8 per cent, slower than the year-on-year growth of 61 per cent in April. Both data are published with an interval of one month.
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