India’s pace of business activity sees second straight week of uptick: Nomura

The Nomura India Business Resumption Index (NIBRI) picked up to 69.7 for the week ended June 6, building up from 62.9 a week earlier and representing a 9.5 percentage points (pp) improvement from 60.2 recorded in May-end, the firm said in a note on Tuesday.

While this indicated that the worst was over for the economy, growth would only rise gradually by June and would crucially depend on two factors – the pace of relaxation of restrictions and the pace of vaccinations, it said.

“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,” said Nomura economists Sonal Varma and Aurodeep Nandi, in the note.

Daily cases dropped to a 66-day low of 86,498 along with 2,123 deaths while India vaccinated 3.3 million people on Monday.

Google workplace and retail and recreation mobility indices were up by over 8pp from the previous week while the Apple Driving Index rose sharply by about 12pp.

Similarly, railway passenger revenue shot up to Rs 460 crore from a low of 160 crore in mid-May, the note said.

Non-mobility indicators were responding more slowly, Nomura said as railway freight revenue remained largely steady over two weeks while Goods and Services Tax e-way bill generation fell in May.

On the other hand, power consumption saw a 7.6% weekly improvement and the labour participation rate was unchanged at 39%, although unemployment rose to 13.6% from 12.2% a week earlier.

Nomura projected the April-June quarter to contract 3.8% on a sequential basis.