The year-on-year (YoY) expansion in economic activity, as measured by the ICRA Business Activity Monitor - an Index of high frequency indicators, eased to 11.4% in July 2026 from 12.1% in June 2026, while remaining quite strong. The slowdown was not broad based, with the YoY performance of half of the 16 constituent indicators seeing a deceleration between these months. Moreover, the YoY growth in the output of the core sector eased to 5.4% in July 2026, amid a moderation in the performance of five of the nine sub-sectors. Looking ahead, ICRA remains concerned around the potential impact of sub-par monsoon rainfall on crop yields, output and farm incomes, which could weigh on rural demand in H2 FY2027. Besides, retail inflation is set to edge up, which may constrain discretionary spending.

• Growth in ICRA Business Activity Monitor eased to 11.4% in July 2026: After rising continuously for the past three months, the YoY expansion in economic activity, as measured by the ICRA Business Activity Monitor, eased to 11.4% in July 2026 from 12.1% in June, while remaining robust. The YoY performance of eight of the 16 constituent indicators dipped in July 2026 compared to June 2026. The pick-up in rainfall in July 2026 is likely to have weighed on the performance of electricity generation and mining output.
• All-India unemployment rate eased to 4-month low 5.1% in July 2026, led by rural areas:
• Rural labour market conditions improved in July 2026, with the worker-population ratio (WPR) rising at a faster pace (+160 bps) vis-à-vis the labour force participation rate (LFPR; +140 bps). Consequently, the rural unemployment rate (UR) eased to 4.5% from 5.0% in June 2026. This was likely driven by a seasonal pick up in agricultural activity, particularly kharif sowing, as was seen in the year-ago period.