Brisk covid vaccination rate impacts Indian economy
Of the eight high-frequency indicators tracked by Bloomberg News, two gained momentum in the past month, while five held steady and one slowed. The needle on the dial measuring so-called animal spirits, however, remained unchanged from July levels, as the gauge uses a three-month weighted average to smooth out volatility in the single-month readings.
Monthly expansion in services and manufacturing activity coincided with relatively few new COVID-19 cases and an accelerated pace of vaccination – more than 834 million doses have been administered so far in a country of 1.3 billion people. That said, a fifth of the population is fully vaccinated and the risk of a third wave of infection remains.
Here are the details of the dashboard for August:
Factory managers in India reported a surge in new orders last month, helping businesses maintain their optimistic growth projections. A similar survey of services purchasing managers showed a return to business confidence amid the easing of virus restrictions. This pushed the composite index into expansion territory for the first time in four months.
Year-on-year exports grew at a steady pace of about 46% in August, although the higher growth has been mainly due to the impact of contraction in the year-ago period. Data from other export powerhouses showed a different trend, with South Korea reporting faster export growth and Vietnam seeing a sharp decline due to disruptions caused by the Covid outbreak.
Retail auto sales, a major driver of consumer demand, showed a mixed trend. While sales of passenger vehicles increased year-on-year, sales of two-wheelers – an indicator of animal spirits in smaller towns – declined.
Central bank data showed bank credit grew by 6.7% in August from a year earlier of 6.5% seen in mid-July. Liquidity conditions remained surplus last month, leaving room for better borrowing.
Industrial output expanded 11.5% in July from a year earlier – a relatively slow pace compared to the first three months of the fiscal year beginning in April, and the closing of a favorable base effect.
Similarly, output in infrastructure industries, which account for 40% of the Index of Industrial Production, grew 9.4% in July with demand for coal, natural gas and cement driving activity. Both data are published with an interval of one month.
– With the assistance of Don Ong and Munija Naqvi.
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