The Economic Activity Tracker is a monthly publication that aims to provide a quick overview of the key high-frequency indicators of the economy. The publication is produced using data from CEIC's India Premium Database.

The composite PMI declined for a third consecutive month, dropping sharply from 55. 4 in April 2021 to 48.1 in May 2021, officially entering the contraction zone for the first time since August 2020, as the figure dropped under the 50-mark. The fall in PMI was mainly on account of the decline in services PMI from 54.0 in April to 46.4 in May. PMI pertaining to manufacturing declined as well, from 55.5 to 50.8 over the same period. The April values of the industrial production index and the core infrastructure industries index surged on account of a low base, by 134.4% y/y and 56.1% y/y, respectively.

The capital goods and consumer durables segments benefitted greatly from the low base effects, experiencing a y/y increase of more than 1,000%. Under core infrastructure, cement, and steel led the way, growing by 548% y/y and 400% y/y, respectively. Metal production moderated in May with pig iron output growth slowing down to 74.5% y/y, and that of finished steel slowing to 58.4% y/y, as low base effects started wearing off. Similarly, growth in electricity generation and GST e-way bills decelerated to 7.7% y/y and 56.8% in May from 42.5% y/y and 582.5% y/y in April, respectively.

Motor vehicle registrations remained on an upward trend, growing by 158.2% y/y in May, thanks to a low base, despite a moderation from April figures. Automobile sales growth slowed down to 97.3% y/y in May, after skyrocketing in the previous month. The growth in passenger vehicle and two-wheeler sales followed a similar trajectory, moderating to 340.1% y/y and 122.4% y/y in May, respectively. Digital payments saw a large increase of 151.7% y/y in April 2021, as the low base effect strengthened. Farm tractor sales, on the other hand, declined by 2.4% in May, indicative of the rise in COVID-19 infections in rural areas, displaying a lagged effect as the virus spread from urban areas. This can hinder economic recovery even further. Overall. consumer demand is likely to stay muted as parts of the country remain under partial lockdown.

The growth in air passenger traffic moderated to 564.3% y/y in May 2021, after shooting up by more than 20,000% y/y in April. Air cargo traffic also followed the same pattern, but growth was more subdued than that in the passenger segment, mainly since the decline in the latter far outweighed that in the former. 

However, international travel restrictions continue, and many countries have banned flights from India, in light of the delta variant of COVID-19 that originates from the country. Under domestic movement, rail freight traffic growth also moderated in May, to 39.1% y/y, due to the dissipating low base effect.

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