Recovery pace slows in August: Nomura India Business Resumption Index

The Nomura India Business Resumption Index (NIBRI) rose to 102.7 for the week ended August 29 from 101.3 the previous week, Japanese financial holding company Nomura said on Monday. However, the pace of recovery slowed in August as the index was up 5.6 percentage points (pp) after a 17.1 pp rise in July and a 15 pp rise in June.

Stating that news on the pandemic has been mixed, Nomura cautioned that a potential third wave cannot be ruled out, especially with the festive season approaching.

“The NIBRI has now been above pre-pandemic levels for three consecutive weeks,” Nomura said in a report.

As per the report, the Google retail & recreation and Apple driving indices rose by 0.6pp and 10pp, respectively, although workplace mobility surprisingly fell by 3.7pp. Power demand rose by 0.1% w-o-w (sa) after a 3.4% contraction last week, while the labor participation rate inched up to 40.8% from 40%.

On the pandemic front, the 7-day moving average of Covid-19 cases rose by around 9,200 from last week to around 41,000 although this deterioration was led by one state- Kerala. On the other hand, the vaccination pace has risen.

“If this pace sustains, India would be on track to fully vaccinate roughly 50% of the population by end-2021. Nevertheless, a potential third wave cannot be ruled out, especially with the festive season approaching,” Nomura cautioned.

Overall, the rapid recovery in NIBRI from the second wave lows suggests that, after a sequential drop in April-June GDP, growth will sequentially rebound in the next quarter. Nomura has maintained its above-consensus GDP growth forecast of 10.4% in FY22.

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