All of the eight high-frequency indicators tracked by Bloomberg News were steady last month. They key readings include purchasing managers index (PMI) data, Output Price Index, Order Books Index, Citi Financial Index, government data on exports, industry and infrastructure sectors, and the Reserve Bank of India data on demand for loans.
India’s PMI, an indicator of economic health for the key services sector which was hit hard by pandemic-induced lockdown, expanded for the second consecutive month in November. It stood at 53.7, slowing from 54.1 recorded a month earlier. Any reading above 50 suggests expansion, while falling below 50 reflects contraction.
Manufacturing activity, which has been driving recovery in the past few months, grew at a slower pace, but was still in positive territory. According to IHS Markit, the Composite PMI Output Index fell by 1.7 points to 56.3 in November as growth of private sector output and sales softened. However, the results were “still consistent with a marked rate of expansion,” analysts at IHS Markit said.
India’s consumer activity also improved, based on sales data and growing demand for loans, which was up over five percent in November. Overall retail sales were still down nearly 45 percent year-on-year, but passenger vehicle sales posted nearly five-percent growth. It was much slower than the over 20-percent increases seen in October and in September, but the previous upticks occurred in the run-up to one of India’s major festivals, Diwali.
Industrial production, including capital goods, jumped over three percent in October year-on-year. The data is released with a one-month lag. Meanwhile, output in infrastructure industries declined more than two percent over the same period, recovering from a record 38-percent plunge in April.
India’s exports dropped last month due to Covid-19 restrictions from some of its trading partners. The country’s outbound shipments were down nearly nine percent in November.
It is unclear if steady recovery will persist after a new coronavirus strain was found in the UK and countries started closing their borders again. India may also see an increase in infections despite flight suspension with the UK.
“By the time we find the new strain in India, it might be too late. If we don’t catch mutations quickly, we can’t move fast to block the virus,” the director of the India-based Center for Cellular and Molecular Biology (CCMB), Dr. Rakesh Mishra, told the Business Standard.
Last month, India had the lowest number of coronavirus infections in four months, while the death toll also fell, according to the Times of India. The country had 1.28 million Covid-19 cases in November, more than 30 percent less than a month before, while fatalities were down to 15,494 from 23,472 a month earlier.
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