Covid-19: Freight Volumes, Petroleum Product Sales Suggest Economic Activity Is Flattening
After mobility and electricity generation, two other key indicators are suggesting a peaking of the recovery.
A rebound in economic activity after the lifting of stay-at-home restrictions has been followed by a flattening of the recovery curve. Since the start of July, concurrent indicators have been weakening as the nationwide lockdown has been replaced with localised curbs.
After mobility and electricity generation, two other key indicators—rail freight and sales of petroleum products—are suggesting a peaking of the rebound in economic activity. As the virus spreads geographically, economic momentum is dipping again, Neelkanth Mishra, India equity strategist at Credit Suisse, said in a note dated July 22.
Rail Freight
Tonnage in rail freight contracted 7.4% in June compared with a contraction of 21.3% in May, according to the Directorate of Statistics and Economics, Indian Railways. However, from July 1-10, tonnage in rail freight contracted 11.4% to 28.14 million tonnes on an annual basis. This is steeper than the contraction of 6% in the last 10 days of June.
Rail freight growth flattened in June and is dipping in July, said Mishra. "Rail freight growth is an important input in GDP estimation — the 27% decline in the quarter is the worst at least in a decade.”
Consumption Of Petroleum Products
Demand for petroleum products had risen after hitting a record low in April. The contraction in demand for petrol eased to 13.6% in June from a contraction of 35.3% in May. Demand for diesel also contracted at a slower pace of 15.4% in June against a contraction of 29.4% in the preceding month.
As per top retailers, however, in the first half of July, diesel sales contracted 21% on an annual basis and by 18% on a monthly basis, according to the note by Credit Suisse. Official data for July is not available.
Google Mobility
The Google Mobility Tracker, which looks at movement across different categories, fell further with workplace visits 34% below the pre-Covid baseline in the June 5- July 17 period.
Mobility to places of retail and recreation also dropped to 59% below the baseline. Visits to supermarkets and pharmacies, that had nearly returned to base levels in the previous mobility report by Google, also showed signs of a reversal, dropping to 7% below base levels.