economy

Economic normalisation continues despite Omicron risks: Nomura

Economic normalisation continues despite Omicron risks: Nomura

The Nomura India Business Resumption Index rose to a record-high of 115.8 for the week ended 12 December from a downwardly revised 112.9 in the prior week. The uptick was led by all sub-components, said Nomura. Despite concerns over Omicron variant of covid-19, the business resumption index is now nearly 16 percentage points above pre-pandemic levels. “Despite Omicron risks, neither policy restrictions nor public fear factor appear to have had any impact on mobility so far, which is supporting a further normalisation in services. Also, after supply-constraint induced declines in August and September, industrial output growth rose sequentially in October, although its pace appears to be plateauing, Nomura said in a report on 13 December. Mobility indicators rose, led by the Google workplace (4 pp over the week) and retail & recreation (2 pp) indices, and the Apple driving index (2.9 pp). The labour participation rate picked up to 41.4% from 40.5%, its highest in eight weeks, and power demand reversed last week’s fall (a 3.7% week-on-week gain after a 5.6% decline). According to Nomura, India remains at risk of virus setbacks since those fully vaccinated account for only 37.5% of the overall population. Yet, data thus far suggest that incremental growth momentum in Q4 may be driven more by services and re-opening and less by industry. Meanwhile, the index of industrial production (IIP) data released on Friday showed growth rose to 3.2% year-on-year in October from an upwardly revised 3.3% in September. According to Nomura, a sectoral breakdown suggests two key pockets of weakness – capital goods and consumer durables. The weakness likely reflects production bottlenecks, such as a shortage of coal and chips. Car production has started to recover: it rose ~25% month-on-month in October, after contracting by 38% in September. Other categories such as primary, infrastructure and consumer non-durables showed an incremental improvement. Download.

economy 2021-12-13 Livemint