Watching the recovery – household data remains weak

INDIA - Report 16 Nov 2021 by Ila Patnaik

The pandemic has largely subsided, google mobility data is close to pre-pandemic conditions, and a nice export boom is in place. But the view of household data is concerning. Household data shows a weak recovery after the peak of the second wave in May 2021. The Indian labor market is mostly a classical labor market, and the employment rate is only 1.8 percentage points behind pre-pandemic conditions. But this market-clearing has been accomplished at a lower wage, which is acting as a drag on household sentiment. While sentiment-based measures are at their best values in the post-pandemic period, they remain substantially behind pre-pandemic levels. This evidence surprises on the lower side. The rate of change of the employment measures has been weak in the past five months.

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