TOPIC – Renewed uncertainty
The latest factory output data released by the National Statistical Office is yet another sign of the rocky start that the economy is having in the new fiscal year. April’s Index of Industrial Production (IIP) estimates show all three sectoral constituents of the index — mining, manufacturing and electricity — suffered reverses, as output slid below the preceding month’s levels. With the second wave of the COVID19 pandemic increasing in intensity that month and several key industrial hubs coming under renewed local lockdowns, all six enduse categories — primary, capital, intermediate and construction goods and consumer durables and nondurables — endured monthonmonth contractions. Manufacturing, which accounts for 77.6% of the IIP, saw production shrink 12.6% from March and contributed significantly to a 13% sequential contraction in overall industrial output. The NSO advised against drawing a yearonyear comparison, which it said would be affected by the fact that the nationwide lockdown had prevented many establishments from operating in April 2020. Figures from April 2019 indicate the IIP registered a marginal 0.08% growth, aided by a 6.8% increase in electricity output from two years earlier. However, from the prepandemic level, manufacturing shrank 0.9%, reflecting the deep rut it finds itself in. The output of capital goods and consumer durables also lagged the corresponding 2019 levels by 14.3% and 11.6%, respectively, signalling that the outlook for investment in production capacity and discretionary consumption remains disconcertingly weak. Consumer nondurables, comprising household essentials, witnessed an almost 11% contraction from March, testifying to the demand destruction that has accompanied the second wave. To be sure, the IIP arrives with a lag of six weeks and may likely be viewed as more of an indicator of past economic activity than as a tool to assist in providing an accurate prognosis. Still, other data from May, including manufacturing and services PMI and retail automobile sales, underline the extent to which economic activity has been constrained since the start of this quarter. With IHS Markit’s surveys showing manufacturing stagnating last month and services contracting for the first time in eight months, the Composite PMI Output Index slid from 55.4 in April to 48.1 in May indicating moderate reduction inactivity. New vehicle registrations more than halved in May from the previous month, another telltale sign of the demand drought. With job losses accelerating, and consumer spending hit by a combination of falling real incomes, depleted savings and increasing healthcare costs, the broader outlook for a nearterm revival in consumptionled demand appears bleak right now. To ensure an abiding recovery, the government needs to expedite targeted, demandcreating fiscal support measures and drastically quicken the pace of vaccinations.
MEANINGS AND WORDS
Rut (noun) – a deep track that a wheel makes in soft ground
Synonyms – groove, furrow, trench, estrus, corrugation
Antonyms – anestrus, break, difference, frost, mound
Lag (verb) – to move or develop more slowly than somebody/something
Synonyms – dawdle, loiter, tarry, straggle, retard
Antonyms – hasten, rush, bolt, hurtle, streak
Discretionary (adjective) – available for use at the discretion of the user
Synonyms – voluntary, discretional, facultative, volitional, capricious
Antonyms – compulsory, imperative, obligatory, indispensable
Disconcertingly (adverb) – in a disturbing or embarrassing manner
Synonyms – confusingly, perturbingly, bewilder, confuse
Antonyms – comfortingly, tranquilly, peacefully, restfully
Prognosis (noun) – a judgement about how something is likely to develop in the future
Synonyms – forecast, prophecy, augury, divination, anticipation
Antonyms – calculate, dismiss, misapprehend, nostalgia
Stagnate (verb) – to stop developing, changing or being active
Synonyms – idle, languish, decline, hibernate, decline
Antonyms – innovate, work, convert, modify
Accelerating (verb) – move faster
Synonyms – expedite, hasten, facilitate, assist
Antonyms – decelerate, slow, hinder, impede, retard
