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As an indication that the economy is turning around, the Nomura India Business Resumption Index (NIBRI) is seen rapidly recovering. The weekly tracker of the pace of economic activity normalization bottomed at end-May and has since registered two consecutive weeks of increase.
Three questions that answer what’s next for the economy
For the week ended June 6, it rose to 69.7 (100 is the pre-pandemic level) from 62.9 in the previous week, and 60.2 at its nadir. This indicates that over the last couple of weeks, the NIBRI has risen by 9.5pp from the bottom, and is currently 30pp below pre-pandemic levels.
“With cases receding and a measured reopening now underway across states, high-frequency data have turned a corner and are starting to improve. This suggests that the month of May will experience the worst economic impact and June should be sequentially better," Nomura said on Tuesday.
Mobility drives the recovery
Google workplace and retail & recreation mobility are up by over 8pp from the previous week’s levels, while the Apple Driving Index has risen even more sharply, by 12pp. Not surprisingly, traffic congestion has also started picking up.
NIBRI registers first uptick after 11 weeks
Railway freight revenues are picking up more gradually, rising to nearly ₹2,700 crore per day from ₹2,600 crore a fortnight ago. The labour participation rate has remained stable at around 39 per cent, although the unemployment rate has picked up to 13.6 per cent against 12.2 per cent in the previous week.
" Near-term growth dynamics remain crucially contingent on two factors — the pace of relaxation of lockdowns and the pace of vaccinations. The former will determine the speed of recovery in mobility and broader economic activity, while the latter will be important for ensuring that the number of cases remains in check and the lockdown easing remains sustained. So far, early monthly data for May suggest a bigger impact on consumption and services, with manufacturing and the export sector having held steady," Nomura added.
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