Pace of economic recovery appears to be gathering momentum in August: Nomura

The economy sustained an increasing pace of recovery through August so far after a prolonged period of plateauing trends in July, according to a Nomura note on Monday.

The Nomura India Business Resumption Index (NIBRI) inched up to 73.7 for the week ending August 16, over the previous week’s reading of 72.3.

This came after the NIBRI, a weekly tracker of the pace at which economic activity normalises, stagnated at the 70 mark for three weeks through July.


While this indicated an improved momentum in August over the moderation in July, the rising spread of infections continued to hinder recovery.

“Nevertheless, the recovery is uneven, and the risk of reversal in momentum from a second wave of COVID-19 cases joining a ‘rolling wave’ in traditional safer states (in the south and the east) remains high,” the note said.

Mobility indicators such as the Google workplace and retail and recreation mobility data resumed an uptrend in August after a prolonged period of flat growth, Nomura said. However, this was still materially below pre-pandemic levels, it added.

There was a steady pick up in the labour participation rate 42.2% as against 40.6% in the previous week.

On the other hand, the unemployment rate showed a steady uptrend rising to 9.1% compared to the 8.2% recorded last week, which grew from 7.2% reported the week before that. The deterioration was spread both over rural and urban areas, the note said.

Power demand also showed a steady trend albeit in the opposite direction with a steep weekly contraction of 6.4% over the 0.8% contraction of the week earlier, it said.