Four of eight high-frequency indicators tracked by Bloomberg News showed activity easing in September, while two showed improvement and two remained stable. Still, the needle on a dial measuring so-called animal spirits remained unchanged from a month ago, as the gauge uses the three-month weighted average to smooth out the volatility of one-month readings.
The reading belies expectations of blockbuster retail sales ahead of ‘Diwali’, the festival of lights, which will herald India’s peak shopping season this month. S&P Global India said weak external demand weighed on overall sales, while the World Bank separately lowered India’s growth forecast for the year to March by one percentage point to 6. .5%, citing rising borrowing costs and global risks.
Starting in August, Bloomberg changed three of the eight indicators to include electricity demand, consumption tax collection and the unemployment rate, replacing Citi India’s financial conditions index, the production of factories and infrastructures. Below are the dashboard details:
Commercial activities
Surveys of purchasing managers showed that activity in the services and manufacturing sectors moderated in September due to inflationary pressures. As a result, the composite gauge hit a six-month low. That said, business confidence remained bullish, with sentiment at its highest level in more than seven and a half years, according to S&P Global.
Exports
Exports fell 3.5% from a year ago, according to preliminary data from the Ministry of Commerce. This is the first drop in more than a year, which the government has attributed to a slowdown in demand in some developed economies.
BloombergConsumer activity
Banking system liquidity tightened, but remained in surplus. Demand for bank credit soared 16.4% as of September 23, the highest level since October 2013, despite borrowing costs at their highest in three years. This trend has supported an 11% growth in retail vehicle sales, according to data from the Federation of Automobile Dealers Associations. Goods and services tax collections, a measure of consumption in the economy, rose 26% in September from a year ago.
Market sentiment
Electricity consumption, a widely used indicator to gauge demand in the industrial and manufacturing sectors, showed a slight increase in activity from the previous month. Peak demand encountered in late September jumped to 187 gigawatts from 185 gigawatts a month ago. Ahead of the festival season, the unemployment rate fell to the lowest in more than four years, helped by a surge in new jobs, according to data from the Center for Monitoring Indian Economy Pvt.
