Business resumptions sustained in early October but resurging virus a risk to growth: Nomura

The Nomura India Business Resumption Index (NIBRI) picked up to 82.1 for the week ended October 4 as against 81.6 in the previous week, suggesting that business resumptions have been sustained in early October.

“A moderation in daily new infection cases and the government’s decision to ease lockdown restrictions from October 15 should further support activity in October,” Nomura said but cautioned that with the festive season and the Bihar elections approaching, the risk of virus cases resurging remains a risk to sequential growth momentum.

There was a moderation in daily new infection cases close to 78,500 (7-day average) from around 91,000 in the previous fortnight. Real activity data on auto sales, railway freight, external sector and manufacturing PMI – all suggest an uptrend in activity in September, after a slower August.

India’s Purchasing Managers’ Index (PMI) rose to the highest in eight-and-half years in September and GST collections rose to a post-pandemic high of Rs 95,480 crore, also 4% higher than Rs 91,916 crore in the same month last year.

Freight loading last month was 102.13 million tonnes against 94.63 million tonnes in August.

“The continued pickup in the Apple driving index and a slight rise in the labour participation rate (40.8% vs 40.2% in previous week) more than offset the contraction in power demand,” Nomura said in a report on Monday.

However, it noted that the unemployment rate escalated sharply to 8% from 5.8% in the previous week led by the rural sector.

“We continue to rely on mid-September trends in Google mobility as later data are still unavailable,” it said.

NIBRI comprises the Google mobility indices, driving mobility from Apple, power demand and the labour force participation rate. Both Google mobility and Apple driving indices are based on a 7-day moving average.