Lockdowns easing: Unemployment rate crawls down, economic activities inch up

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The CMIE 30-day moving average has shown a reduction in unemployment rate after several weeks but research agencies said economic activity index was about 25% down from pre-second wave levels

As states are gradually lifting mobility restrictions and shutdowns, the economy is slowly reviving. Different indicators have pointed in this direction over the past few days and the most welcome relief of which has been an inching down of the unemployment rate.

Centre for Monitoring Indian Economy (CMIE) data show that after a relentless march upwards, the 30-day moving average unemployment rate moved down every day since June 7.

Since June 7

The unemployment rate in the country crawled down from a high of 12.99% on June 7 to 11.75% on June 14, everyday saving off a few basis points. In this time window, the urban rate fell from 15.66% to 14.68% and that in the rural areas came down from 11.80% to 10.43%.

Unemployment rates climbed to double digits in May 2021 – the second month of restrictions by most states during the second wave of the infection – 11 months after it fell from 10.18% in June 2020, the third month of nationwide lockdown during the first wave.

Economy tracker up

Research agency QuantEco stated that their Daily Activity and Recovery Tracker (DART) index detected a fourth consecutive weekly expansion in economic activity for the week ending June 13.

“Our DART index rose by 10.5% week-on-week in the week ending June 13, though a bit softer compared to 13.1% in the previous week,” said Yuvika Singhal, economist, QuantEco. She added that it marked the fourth consecutive week of economic activity on the mend, reversing nearly half of the dip the agency recorded over mid-March 2021 to mid-May 2021 in tandem with the second wave of the infection.

Below pre-second wave

Singhal also added that the DART index remains about 25% lower than the pre-pandemic baseline of 100 which was overshot in February-early March this year.

On the consumption side, Google-based mobility maintained its recovery but at a slower pace compared to the earlier week. Railway passenger movement also exhibited a similar trend. Apple driving mobility and restaurant searches online displayed a faster rise compared to the previous week, said the agency.

Generation of GST bills, an indicator of purchase of goods and services, also exhibited a fast rise.

In its report on June 15, QuantEco predicted a faster opening up of the economy this year compared to 2020.

“Averting a third wave will critically hinge of maintaining Covid-responsible behaviour and swifter pace of vaccinations,” said the agency’s weekly report on the economy.

Monsoon mood

If there is any fillip to the economy that can be counted on in the next few months, it is a normal monsoon. Indian agriculture output in critically dependent on monsoons and healthy farm output would also help revive the rural economy faster, triggering a rise in consumption of different products from fast moving consumer goods, consumer durables, two wheelers and tractors.