Notwithstanding the buoyancy in stock market, the economy has shown some clear signs of fatigues in February. The post lock down recovery from September onwards appears to be pausing, as pent up consumer demand has subsided and rise in raw material prices has dampened the sentiments. Some signs of economy pausing could be read from the following:
(a) GST payments in
February (for collections in January) have declined after rising for three
consecutive months.
(b) E-Way collection
in February were also much below the December levels.
(c) Exports have
been mostly flat for the month of January and February; while imports have
declined from the December levels.
(d) Non food credit growth
slowed down further in January.
·
The Industrial credit contracted -1.3% in
January. The contraction was led by large industrial credit, which constitutes
~82% of industrial credit and de-grew 2.6% YoY. Within industrial credit,
sectors such as infrastructure (led by telecom), metals and all engineering saw
persistent YoY de-growth.
·
Service sector credit growth slowed to 8.4%
(yoy) in January against 9.5%
·
Personal loan growth slowed down to 9.1% (yoy),
the slowest rate in 10year. Home loan growth 7.7% was lowest in a decade
despite easing rates.
·
MSME credit grew at meagre 0.9% (yoy), despite
all the incentives, programs and schemes for promoting and protecting the
credit flow to MSME sector.
(e) In January the
eight core sectors’ output growth slowed down to 0.1% (yoy) from 0.2% (yoyo) in
December.
·
Cement production fell by ~5.9% YoY in January
2021 according to the core industries data released by the Government of India.
The YTD demand continues to be weak with the fall of ~16.6% as indicated by the
data.
·
As per a recent report of Nomura Securities, “Indian
steel demand dropped 6% m-m for Feb-21 (though 7% y-y) as buying interest from
large construction majors turned sluggish on high prices. Key infra names have
slowed down execution. Further, major stockists and distributors are holding
decent inventories and seem reluctant to procure material at higher prices.
Demand growth y-y has been boosted by double digit demand growth in key
segments like autos, white goods and consumer durables, according to
Steelmint.”
(f) As per another
recent report by Nomura securities, “The Nomura India Business Resumption Index
(NIBRI) fell to 95.2 for the week ending 7 March vs 98.1 in the prior week,
indicating that the gap from the pre-pandemic normal has slipped to 4.8pp from
only 0.7pp a fortnight earlier. Both the Apple driving index and the Google
retail & recreation indices have taken a hit, while workplace mobility
continued to improve. Power demand fell by - 8.5% w-o-w (sa) vs 4.2% in the
prior week, while the labour participation rate also fell to 39.8% from 40.6%
previously.”
