NEW DELHI: India’s services and manufacturing activity held steady in February, even as the war in Ukraine clouds the outlook for prices and growth in the consumption-driven economy.
All eight high-frequency indicators compiled by Bloomberg News showed activity was steady last month.
The gauge uses the three-month weighted average to smooth out volatility in the single-month readings.
The reading, which comes ahead of the central bank’s monetary policy decision early next month, doesn’t capture the plethora of risks looming over the economy due to the Russia-Ukraine conflict.
These include a surge in inflation amid higher energy and food prices, which could in turn dent disposable incomes in a nation where private consumption accounts for some 60% of gross domestic product.
The Reserve Bank of India continues to be supportive of economic growth, governor Shaktikanta Das said Monday, signalling above-target inflation is not as much of a threat to Asia’s third-largest economy at the moment.
Purchasing managers surveys showed activity at Indian factories and service providers gained momentum as easing pandemic curbs saw demand return.
That helped the composite index climb half a notch to 53.5 in February, with 50 representing the point between contraction and expansion. The rebound is, however, at risk of being reversed given the hit to sentiment from Russia’s invasion of Ukraine, according to Bloomberg Economics’ Abhishek Gupta.
Exports growth broadly remained unchanged in February, growing 25.1% from a year ago.
Imports, however, surged more than 36% on higher oil and gold purchase bills, widening the trade deficit to US$20.9bil (RM88bil) from US$17.4bil (RM73bil) in January.
The slack in the automobiles sector continued with passenger vehicle sales falling for a sixth straight month, declining almost 8% in February. The pace of decline was slower than January, but industry associations see a global supply-chain disruption and semiconductor chip shortage prolonging their woes.
Other signs of consumer activity weren’t encouraging either with bank credit growth slowing to 7.9% in end-February, from 8.2% in the previous month. Liquidity conditions continued to remain in surplus.
Factory output growth picked up, rising 1.3% in January after hitting a 10-month low in December, aided by mining and electricity output. Output at eight infrastructure industries, which make up 40% of the industrial production index, moderated to 3.7% in January from a revised 4.1% in December. Both reports are published with a one-month lag. — Bloomberg