(Bloomberg) — India’s economy showed signs of stabilizing last month, with strong demand for services helping weather headwinds from high inflation, according to a gauge of earliest available indicators.
From August, Bloomberg News has changed three of the eight indicators it uses to track the economy’s so-called animal spirits. It now includes power demand, goods and services tax collection, and unemployment rate, in place of the Citi India Financial Conditions Index, factory and infrastructure output.
The indicators showed sentiment in the services sector — which accounts for over 50% of the $3.2 trillion economy — was upbeat, tax revenue were robust and demand for loans high. A rising jobless rate was the main drag during the month.
Still, the needle on a dial measuring overall activity was unchanged from July, as the gauge uses a three-month weighted average to smooth out volatility in the single month readings.
The steady pace of activity is expected to give monetary policy makers the confidence to continue raising interest rates to fight above-target inflation when they meet later this month. The Reserve Bank of India, which has raised interest rates by a total of 140 basis points in three moves this year, has said it targets a soft landing for the economy where growth isn’t sacrificed too much.
Below are details of the dashboard. (For an alternative gauge of growth trends, follow Bloomberg Economics’ monthly GDP tracker — a weighted index of 11 indicators.)
Business Activity
Purchasing managers’ surveys showed a rebound in S&P Global India Composite PMI in August, thanks largely to a stronger expansion in services activity amid an upturn in new orders and slower increase in input costs.
Exports
Trade deficit hovered close to a record high last month as exports growth was little changed from a year ago, while imports jumped nearly 37%, according to preliminary data from the commerce ministry. A 2.2% year-on-year drop in value of non-petroleum exports in August weighed on the overall performance.
Consumer Activity
Bank credit demand jumped 15.5%, the most since November 2013, despite rising interest rates, data from the central bank showed, while liquidity in the banking system continued to be in surplus. That helped broadly support consumption activity, underscored by a jump in monthly goods and services tax collection. GST revenue in August came in at 1.44 trillion rupees ($18 billion), compared to early days of the pandemic when collections fell to as low as 323 billion rupees.
Market Sentiment
Electricity consumption, a widely used proxy to gauge demand in industrial and manufacturing sectors, showed activity is picking up. Numbers from India’s power ministry showed peak demand met in August jumped to 185 gigawatt from 167 gigawatt a month ago. However, rising unemployment numbers tempered the overall optimism, with data from the Centre for Monitoring Indian Economy Pvt. showing the jobless rate climbed to 8.3% — the highest level in a year. That shows the current pace of expansion isn’t enough to create jobs for the million plus people joining the workforce every month.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
