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The index of economic activity (CEM) grew at a subdued pace of 1 per cent in July compared with 5.7 per cent a month ago, as per the CareEdge Ratings Economic Meter.

It was the slowest growth in 18 months. Sequentially too, the index fell sharply to 108.9 in July from 117.9 in June.

Weak trade data, mixed rural demand indicators and moderation in corporate bond issuances weighed on CEM growth.

However, services PMI, E-way bill issuances, power consumption and PV sales extended support.

As per the report, high food inflation, uneven monsoon progress and weak external demand are major headwinds to the economic performance in coming months.

Indicators of rural demand performed poorly in July. While two-three wheeler sales were down nearly 8 per cent, tractor sales remained unchanged compared to a year ago level as incessant rains and flooding in some parts of the country impacted the demand.

Heavy rains also restricted mobility which impacted petroleum consumption in July. It recorded a muted growth of 2 per cent during the month, down from 4.5 per cent growth a month ago.

The unemployment rate improved in July to 7.95 per cent from a month ago at 8.45 per cent due to higher demand for agricultural labour. 

However, it was still much higher than a year ago at 6.83 per cent in July 2022, the report said.