Released: 28 May 2021
May Sales Data Reveals Massive Recession in India
Sales Managers Indexes are very different to most other monthly economic survey data, in that the indexes permit year on previous year comparisons, rather simply the most recent month compared with the previous month. The May survey consequently reflects the massive recession caused by the Indian Government's chaotic management of the Covid epidemic.
All the sales related Indexes now reflect the toll taken by Covid in India. The Sales Managers Staffing Levels Index in particular showed a further large fall in employment related activity compared with May 2020. But the comparison with May 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 May 2020 (See Data). Economic activity in May 2020 was in fact already at an all time low for the Index (the job index recorded an almost impossibly low reading of 19.3) , so the May index actually reflects a major fall in employment coming on top of an already massive fall.
Given this situation, the intensely serious unemployment picture and the massive loss of output created by Covid will now take many months to reverse.
It is 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 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 years old) 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...
India SMI: Staffing Levels Index
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