PremiumEconomic activity in India picked up speed last month, signaling it was well on the road to recovery before a new wave of coronavirus infections derailed progress.
The needle on a dial measuring so-called animal spirits moved a notch higher 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.
Premium While last month’s score -- helped by faster exports and improved liquidity -- cements a solid showing in the January to March quarter, fresh activity curbs amid the world’s worst Covid-19 outbreak in India merit a real-time reading of the economy using other indicators.
A basket of of high-frequency, alternative and market indicators pointed to a sharp slump in services activity in the week to April 25, Abhishek Gupta, India economist at Bloomberg Economics, said in a note Wednesday.
Here are the details of the animal-spirits dashboard:
Business Activity
Activity in India’s dominant services sector moderated in March after expanding the previous month at its quickest pace in a year. The IHS Markit India Services PMI eased to 54.6 from 55.3, with a reading above 50 signaling growth. A similar survey for the manufacturing sector also showed expansion moderating.
Exports
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Premium Premium Exports grew more than 60% from a year ago, engineering goods, with gems and jewelery, drugs and pharmaceuticals, and chemicals leading shipments. Merchandise imports too staged a smart rebound in March, growing by 53.7% from a year ago on the back of an uptick in domestic economic activity.
Consumer Activity
Passenger vehicle sales more than doubled from a year ago, rising to 291,000 units in March, according to SIAM data. Two-wheeler sales were at 1.5 million units, compared with 867,000 last year.
That optimism was, however, was tempered by slowing demand for loans. Bank credit grew 5.6% in March from a year earlier, dropping from 6.6% in February, central bank data showed. Liquidity conditions improved a bit, with the banking system in surplus, despite advance tax outflows in the second half of March.
Industrial Activity
Industrial production contracted 3.6% in February from a year earlier, reflecting a slowdown across most sectors. The only bright spot was consumer durable goods, which recorded surprisingly strong growth, helped by a lower base.
Output at infrastructure industries, which makes up 40% of the industrial production index, also shrank 4.6% in February from a year ago, with a drop in cement output leading the charge. Both data are published with a one-month lag.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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