Business activity in the country fell during the week that ended 5th July, dropping for the first time since May when the government eased restrictions on business operations.
Business activity in the country fell during the week that ended 5th July, dropping for the first time since May when the government eased restrictions on business operations. “Activity has recovered from the lows of around 45 at end-April and rose sharply from May until mid-June, but the pace of increase has slowed since. This is the first time the index has fallen in the post-lockdown phase (since May) on a week-on-week basis,” The Nomura Business resumption Index (NIBRI) said in a report on Monday. The levels moderated to 69.2 in the week ending 5th July, dropping from 70.5 in the preceding week.
Google data, Jobs reports paint gloomy picture
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The sudden decline in the business, after resuming, was largely driven by a continued flattening of Google’s mobility indices along with a downtick in labour participation and power demand, the report said. According to Google’s latest mobility report which tracks movement to places such as restaurants, museums, supermarkets, cafes, public transport hubs, workplaces etc, there is a fall in the movement of people as compared to February baseline. The unemployment rate has also gone up in the past 15 days according to CMIE’s weekly data. In the week ending 5th July, the overall unemployment rate inched up to about 8.9% as the participation rate fell by 1.5pp to 40.4%. Power demand has also contracted by 5.8% on a weekly basis after growth of 4.1% in the prior week.
Long road to pre-coronavirus level
While business activity continued to inch upwards in June, the same has not reached pre coronavirus levels. “Activity remains about 30pp below pre-pandemic levels. So the normalisation is still far from complete, and activity appears to be plateauing at a lower level,” the Nomura report said. The government had imposed a nationwide lockdown to keep the spread of coronavirus in check on 24 March 2020. After two months of observing a strict lockdown, the country eased many restrictions to revive the economy.