High frequency indicators turn 'uneven' in Aug as unlock benefits taper

With the benefits of unlocking measures tapering out, high-frequency indicators have become uneven since August, a domestic rating agency said on Monday.

However, the upcoming festive season will see a rise in confidence-boosting demand, Icra Ratings said, adding it is cautiously optimistic about it.

The performance of the high-frequency indicators in August 2021 was decidedly uneven, especially when compared to the pre-COVID levels. It appears that the temporary boost, provided by the easing of state-wise restrictions after the second wave of COVID-19 ebbed, petered out, its chief economist Aditi Nayar said.

The agency is cautiously optimistic despite the early trends for September being unconvincing, she added.

The year-on-year (YoY) performance of eight of the 15 high-frequency indicators weakened in August 2021 compared to July 2021, partly on account of the normalisation of the base, the agency said.

Besides, passenger vehicle output was impacted because of the non-availability of semiconductors, it added.

Indicators showing an improvement include the output of Coal India Limited (CIL), electricity, ports cargo traffic, GST e-way bills and non-oil merchandise exports, the agency noted.

The performance of the 13 non-financial indicators in August 2021 was mixed in both month-on-month (MoM) as well as pre-COVID terms. Particularly, after a sharp recovery since June 2021, the daily average generation of GST e-way bills rose only mildly to 2.13 million in August 2021 from 2.07 million in July 2021.

Icra attributes this to stabilisation in dispatches rather than a signal that the industrial growth momentum is plateauing, it said.

Mobility for retail and recreation improved to 16 per cent below the baseline by August-end 2021 from 23 per cent below the baseline at July-end 2021 (seven-day moving average), it said, adding FASTag toll collections in August 2021 rose by 3.4 per cent in month-on-month terms to Rs 30.8 lakh crore.

Diesel consumption, two-wheeler output, vehicle registrations and domestic passenger traffic recorded lower volumes in August 2021 when compared to pre-COVID levels, it added.

Looking ahead, with a gradual improvement in the economic situation, the waning impact of high healthcare costs related to the second wave and the improvement in the coverage of COVID-19 vaccines, confidence levels should improve.

This should enhance consumption during the festive season, manifesting a perceptible improvement in the performance of the high-frequency indicators in October 2021, Nayar said.