In this edition of This Week In Data we discuss:
Decline in urban unemployment rate in March quarter
Increase in the Labour Force Participation rate
Continued increase in self-employed workers
CPI Inflation for April
April Trade data
In case you missed, we started tracking Agri commodity prices from across all the Mandis. We are covering 59 commodities currently and are building price indices on top of it with the eventual aim of releasing a robust inflation nowcasting framework next month. You can read more about this from here
The CSO released the quarterly PLFS data for the March quarter earlier this week. And the unemployment rate declined modestly in urban areas during the March quarter compared to the year-ago period. At a broad level though the unemployment rate in urban areas has stabilised at just below 7% for the past 5 quarters. But the unemployment rate is not falling.
But what seems to be happening is that more people are joining the workforce – the labour force participation rate (LFPR) has increased by 170bps during the March quarter – the second consecutive quarter of sharp increase in the LFPR. The LFPR is now at 50% implying half the population above 15 years of age (in urban areas) is in the workforce. This is 4ppt higher than the level 5 years back. And the LFPR has increased more for women than for men. Just over 25% of the (urban) women are now in the labour force (meaning they are either working or are looking for work). Five years back, less than 20% of the women were in the labour force.
This manifests itself in the increase in the percentage of people who are working. As of the March quarter this year, about 47% of the urban population above the age of 15 was working, almost 5ppt higher than the ratio 5 years back. Ballpark calculations suggest that in absolute terms this translates into a 15-20% increase in the total number of working people in urban areas relative to 5 years back.
But there is a catch in the data. One of the criticisms of the post-Covid recovery in the labour market has been the perceived weak quality of jobs. In the PLFS this manifests itself in the increase in the number of self-employed people relative to those earning a regular wage or salary. Especially for women. And that has continued in the latest quarter as well. The proportion of people classified as self-employed increased by 1ppt this quarter while those classified as earning a regular wage or salary declined modestly. And like in the previous few quarters, this trend was more pronounced for women than for men. The pessimists point to this as a sign of distressed employment while the optimists point to this as reflecting the growing share of the gig economy. To paraphrase an adage: where you stand on this topic depends to a large extent on where you sit on a certain spectrum. So, pick your seat…
Now onto Inflation. CPI Inflation was almost unchanged in April (ok it declined 2bps, if you have to nitpick) at 4.8% YoY and is at a 1-year low. Core inflation also remained largely unchanged at 3.2% YoY in April, and it remains at all-time lows for this series (2012 base). Food inflation rose 20bps to a 4-month high of 7.9% YoY.
This will be the last CPI print before the June monetary policy and given that neither the growth nor the inflation data have changed materially since the April policy, this should result in a status quo in the June policy – both in terms of the actual policy rate as well as the policy stance.
We also got the April trade data this week. Merchandise exports increased by 1% YoY. Electronics exports grew 25% YoY and were the key driver of exports followed by Chemicals which grew 18% YoY. Textile exports were largely flat while Gems & Jeweller exports declined in single digits.
Imports however increased 10% driven largely by a tripling of Gold imports. Oil Imports also rose 20% YoY. Excluding these two categories’ imports declined in April. The other notable category to see an increase in imports was electronic goods which saw a 10% increase in imports. The faster growth in imports relative to exports led to a sharp widening of the trade deficit to a six-month high of US$19bn in April 2024. This is almost a third higher than during April last year.
That’s it for this week. If you are in and around Mumbai, it is time to go out and vote on Monday. Let’s get inked!