In December, India’s economic momentum remained constant, despite the first signs of slowing output growth in several industries.
This is the reading from Bloomberg News’ overall activity tracker, which consists of eight high-frequency metrics. While the needle on a metre measuring ‘Animal Spirits’ remained constant at 5 for the eighth month in a row. Major producers in consumer durables and cars warned weakening as the year came to a close.
The reading is likely to have worsened this month as omicron-fueled Covid-19 instances increased. Leading certain Indian governments to implement virus-control measures such as restricting some services and economic enterprises. As the government prepares its annual budget and rate-setters prepare to review borrowing costs in February. This is likely to force India’s policymakers to maintain their accommodating stance.
Below are details of the economic dashboard.
According to IHS Markit, activity in India’s dominant services sector increased for the fifth month and manufacturing for the sixth, while growth in new contracts and production slowed. While the composite index fell to 56.4 in December from 59.2 in November, it remained above its long-run average.
Exports increased 39 percent year on year to $37.8 billion in December, the largest monthly total on record, led by commodities, chemicals, and electronics. The trade gap, however, remained substantial at nearly to $22 billion due to increased imports.
Consumer economic activity:
Passenger car sales decreased for the fourth month in a row as manufacturing was hampered by a global chip shortage. Aside from that, demand for bank credit increased by a robust 9.2 percent year on year at the end of December, while liquidity conditions were in excess last month.
Industrial economic activity:
Industrial production growth slowed to a nine-month low of 1.4 percent year on year in November, according to QuantEco Research analyst Yuvika Singhal, due to factors such as a post-holiday dip in output and supply-side interruptions.
Infrastructure output, which accounts for 40% of the industrial production index, fell to 3.1 percent in November.