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India’s economy held steady in July as waning Covid-19 cases paved the way for a gradual improvement in manufacturing and services activity.
All eight high-frequency indicators tracked by Bloomberg News remained unchanged last month, based on the three-month weighted average scores to smoothen out volatility in the single-month readings. That kept the needle on a dial measuring the so-called animal spirits steady at 5 — the same speed as June.
Relaxation in restrictions and a lower-than-expected hit to the economy from the second wave of the pandemic is fueling hopes of a faster recovery in coming months. Data due Aug. 31. will likely show gross domestic product expanded 21% in the April to June quarter from a year ago. That is thanks mainly to a favorable base effect, with activity last year coming to a halt owing to a nationwide lockdown to control the virus’s spread.
Here are the details of the dashboard for July:
Factory managers in India saw a surge in activity in July, reflecting a pick up in orders as pandemic curbs were lifted. A similar survey of services’ purchasing managers showed improvement, although the reading remained below the 50 level that divides contraction and expansion. That kept the composite index in shrinkage territory during the month.
Exports rose 49.8% year-on-year in July. While that was way slower than the 196% increase seen in April, the ebbing gains largely reflect the base effect wearing off. Two positive takeaways are the return of demand for petroleum products, with shipments jumping 231%, and gems and jewelry exports growing 131%.
Retail auto sales, a bellwether of consumer demand, posted robust sales despite a steep rise in commodity prices and supply disruptions, according to Rajesh Menon, director general of the Society of Indian Automobile Manufacturers. Motorcycle and two-wheeler sales, an indicator of animal spirits in smaller towns, were little changed last month.
Bank credit grew 6.5% in July from a year earlier, picking up from the 5.8% level seen in June, to post the fastest pace since March, central bank data showed. Liquidity conditions remained comfortable last month, with the banking system flush with surplus cash, implying room for better credit off-take.
Industrial production expanded 13.6% in June from a year earlier, slowing for a second straight month after a record 135% growth in April. Easing gains are again attributable to the base effect wearing out.
Similarly, output at infrastructure industries, which makes up 40% of the industrial production index, expanded 8.9% in June, slowing from year-on-year growth of 16.3% in May and 61% in April. Both data are published with a one-month lag.
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WASHINGTON (AP) — Restaurant and hotel owners struggling to fill jobs. Supply-chain delays forcing up prices for small businesses. Unemployed Americans unable to find work even with job openings at a record high.
Those and other disruptions to the U.S. economy — consequences of the viral pandemic that erupted 18 months ago — appear likely to endure, a group of business owners and nonprofit executives told Federal Reserve Chair Jerome Powell on Friday.
The business challenges, described during a “Fed Listens” virtual roundtable, underscore the ways that the COVID-19 outbreak and its delta variant are continuing to transform the U.S. economy. Some participants in the event said their business plans were still evolving. Others complained of sluggish sales and fluctuating fortunes after the pandemic eased this summer and then intensified in the past two months.
“We are really living in unique times,” Powell said at the end of the discussion. “I’ve never seen these kinds of supply-chain issues, never seen an economy that combines drastic labor shortages with lots of unemployed people. … So, it’s a very fast changing economy. It’s going to be quite different from the one (before).”
The Fed chair asked Cheetie Kumar, a restaurant owner in Raleigh, North Carolina, why she has had such trouble finding workers. Powell’s question goes to the heart of the Fed’s mandate of maximizing employment, because many people who were working before the pandemic lost jobs and are no longer looking for one. When — or whether — these people resume their job hunts will help determine when the Fed can conclude that the economy has achieved maximum employment.
Kumar told Powell that many of her former employees have decided to permanently leave the restaurant industry.
“I think a lot of people wanted to make life changes, and we lost a lot of people to different industries,” she said. “I think half of our folks decided to go back to school.”
Kumar said her restaurant now pays a minimum of $18 an hour, and she added that higher wages are likely a long-term change for the restaurant industry.
“We cannot get by and pay people $13 an hour and expect them to stay with us for years and years,” Kumar said. “It’s just not going to happen.”
Loren Nalewanski, a vice president at Marriott Select Brands, said his company is losing housekeepers to other jobs that have recently raised pay. Even the recent cutoff of a $300-a-week federal unemployment supplement, he said, hasn’t led to an increase in job applicants.
“People have left the industry and unfortunately they’re finding other things to do,” Nalewanski said. “Other industries that didn’t pay as much perhaps … are (now) paying a lot more.”
Christopher Rugaber, The Associated Press
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