After falling for 11 consecutive weeks, the Nomura India Business Resumption Index (NIBRI) registered its first uptick, picking up to 63.6 for the week ending 30 May (36.4pp below pre-pandemic level) from a low of 60.3 in the previous week.
Mobility indicators seem to have driven the uptick. Google’s workplace and retail & recreation mobility indices picked up by 5.1pp and 3.1pp from the previous week, while the Apple driving index rose by 6.1pp, after a 4.6pp rise the previous week. Power demand also rose by 5 per cent w-o-w , reversing the average weekly 4 per cent contraction for the past six weeks. The labour participation rate, on the other hand, moderated to 39 per cent from 39.4 percent, although the unemployment rate improved to a still-elevated 12.2% from 14.7% last week.
"If the NIBRI continues to exhibit a nadir over coming weeks, it will support our view that the worst hit to activity is limited to May, and a sequential improvement will follow in June. As states slowly embark on a calibrated easing of restrictions, mobility should improve, and real activity data should gradually follow. A key risk is a resurgence of cases as states relax lockdowns. However, with vaccinations likely to pickup, we continue to expect the economic hit from the second wave to be significantly less than that of the first wave, and also," Nomura said.