India's economic activity index hits 5-month high in October 2023

21 Nov '23

2 min read

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Insights

In October 2023, India's economic activity surged by 7.5 per cent, marking the highest expansion in five months.
This growth, driven largely by festive demand, was reflected in half of the 18 high-frequency indicators used in the CareEdge Economic Meter (CEM).
Despite this growth, challenges persisted in the labour market and manufacturing sector.

India's economic activity saw a robust growth in October 2023, according to CareEdge Ratings. The country’s CareEdge Economic Meter (CEM) has registered a 7.5 per cent growth in October, marking the highest expansion rate in the last five months. This surge is attributed to increased economic activities stimulated by festive demand.

The CEM, which employs 18 high-frequency indicators for its calculation, reported that half of these indicators showed significantly higher annual growth in October compared to the previous month. This indicates a positive momentum in various sectors of the Indian economy.

Despite this uptick, the report highlighted certain limitations to this growth. The labour market in India showed signs of weakness, and there was a notable annual contraction in corporate bond issuances. Additionally, the manufacturing sector experienced a loss of momentum, which somewhat tempered the overall economic growth, as per CareEdge Ratings.

In the realm of international trade, India's merchandise exports grew by 6.3 per cent in October, benefiting from a favourable base effect. However, this was outpaced by merchandise imports, which expanded by 12.4 per cent, indicating a robust demand for foreign goods.

A key indicator of economic health, the goods and services tax (GST) collections, saw a sharp surge of 13.4 per cent year-over-year in October, reaching Rs 1.72 trillion. This represents the highest growth in the last 10 months and is largely credited to increased consumption during the festive season, along with improved compliance.

The manufacturing sector, however, displayed signs of cooling. October witnessed a moderation in manufacturing activities due to slowing demand and rising costs. This is evident from the manufacturing purchasing managers' index (PMI), which slowed to an eight-month low of 55.5.

Fibre2Fashion News Desk (DP)

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