India’s economic activity appears to be slowing due to reduced resilience

Although a dial measuring so-called Animal Spirits showed activity was steady for the fifth straight month in November, the needle was just one bad data point from swinging to the left. Exports, a key growth lever in the past year, were among three of the eight metrics that performed poorly. the rest were unchanged.

Bloomberg’s dashboard shows a broadly grim outlook for 2023 as tighter global interest rates weigh on demand. The gauge uses a weighted average of three months to smooth out volatility in one month’s readings.

Below are more details:

Business Activity

The purchasing managers’ survey for November showed activity in the services and manufacturing sectors improved, although the three-month weighted average was still weak. New orders rose sharply in both sectors, while output prices rose at their fastest pace in three months.

Pollyanna de Lima, associate director of economics at S&P Global Market Intelligence, said the latest results are good news, even if the inflation trend is somewhat worrying. “Evidence of stable inflation may warrant a further increase in the policy rate at a time when global economic challenges may negatively impact India’s growth,” he added.

export

Data released by the trade ministry showed exports grew by barely 0.6% last month after a decline of 16.7% in October. Only half of the 30 sectors registered growth. The government attributed the weak performance to weak demand for engineering and iron ore products.

Imports climbed 5.4 per cent, keeping India’s trade gap above $20 billion for the eighth month in a row. This puts pressure on the country’s current account deficit, which is a major vulnerability for the economy and RupeeThe most affected major Asian currency this year after the Japanese yen.

consumer activity

Data from the Reserve Bank of India showed that bank credit demand remained healthy at 17.2 per cent, despite tighter liquidity conditions and higher borrowing costs. Goods and Services Tax collection, which helps measure consumption in the economy, grew 11 per cent, a modest performance compared to October’s 24 per cent jump.

market sentiment

Electricity consumption, a widely used proxy to measure demand in the industrial and manufacturing sectors, was weak, with peak requirement rising to 162 gigawatts from 155 gigawatts in October last month. According to data from the Center for Monitoring Indian Economy Pvt, India’s unemployment rate has reached 8 per cent.

The text of this story is published from a wire agency feed without any modification.