Released: 30 June 2021
June Sales Data Reveal Severe Recession Continues in India
Sales Managers Indexes are very different to most other monthly economic survey data, in that the indexes permit year on year comparisons of monthly data, as well as month on previous month. All Sales Managers data currently reflect the massive recession caused by the Indian Government's chaotic management of the Covid epidemic.
All the economic activity related Indexes reflect the toll taken by Covid in India. The Sales Managers Business Confidence, Market Growth and Sales Growth Indexes all show reduced actual and expected activity levels both over one month previously and one year previously.
The Job Index shows the largest fall of any index, in this case in employment related activity compared with June 2020. But the comparison with June 2020 greatly understates the fall in output and employment in the Indian economy, because the comparison doesn't include the already massive falls in activity that had taken place by June 2020. Economic activity in June 2020 was in fact already at an almost impossibly low level, so the June 2021 index actually reflects a major fall in employment coming on top of an already massive fall.
On top of the serious fall in economic activity comes a rapidly advancing level of price inflation, with the Price Index in June registering 55, a level too high for comfort. This may prove a temporary high caused by shortages of materials resulting from Covid, or alternatively a precursor of more elevated price levels.
In more developed countries currently elevated price indexes are generally thought of as resulting from temporary Covid related supply bottlenecks, but it's difficult to be sure of much in India's precarious position.
What is fairly certain is that the serious unemployment picture and the massive loss of output created by Covid will now take many months to reverse. It is also likely that cases of Covid, resulting deaths and economic consequences have to date been considerably underreported in India, but there can no longer be any question as to the seriousness of the economic situation.
However, there is one factor, almost unique for a major country that has in the past been a driver of global growth, that could mean a relatively rapid recovery. The median age of the population in India (27) is far below that of most developed countries (38 in the US, 40 in the UK, and 47 in Italy which has reported one of the highest death rates. As Covid impacts on the old to a much greater extent than on the young, this youth factor may offer a route to recovery significantly faster than would otherwise be the case. But this won't be next month...
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