IIP Growth At Nine-Month High In July
India’s industrial output rose at its fastest pace in nine months in July, beating expectations.
The Index for Industrial Production rose 4.3 percent in July 2019 compared with a 6.5 percent increase a year ago, according to data released by the Ministry of Statistics and Implementation. Twenty-nine economists polled by Bloomberg had forecast July’s industrial output growth at 2.3 percent.
In June, IIP grew 2 percent and started moderating on the back of a weak economy. The cumulative growth for April-July over the corresponding year-ago period stood at 3.3 percent.
The pickup in the IIP growth in July 2019 compared to the previous month was modestly higher than expected, boosted by the double-digit growth in food products, wearing apparel and basic metals, ICRA Vice President and Principal Economist Aditi Nayar said.
However, even as the IIP growth recorded an improvement in July compared to June, Nayar suggested that this trend is likely to be short-lived.
Early data reveals a contraction in the output of Coal India Ltd. and automobiles, as well as electricity generation in August, suggesting that the next IIP print is likely to be muted.Aditi Nayar, Vice President, Principal Economist, ICRA
"I would actually look at the intial data that we have for August than be too enthused by the IIP data for July in terms of looking at how to forecast Q2 GDP and GVA growth,” she told BloombergQuint.
All the three key sectors—mining, manufacturing and electricity—saw growth in July, while growth in electricity generation was weaker than the previous month. Thirteen of the 23 manufacturing industry groups saw growth in output in July.
- Manufacturing output growth stood at 4.2 percent in July compared to 1.2 percent in June.
- Mining output rose 4.9 percent compared with 1.6 percent growth in June.
- Electricity generation rose 4.8 percent. Growth was at 8.2 percent in June
Industrial output, as classified by the end-use of goods, showed a contraction in output of capital goods and consumer durables.
- Consumer durables output shrank 2.7 percent, while consumer non-durables recorded a growth of 8.3 percent in July.
- Capital goods output contracted 7.1 percent in July compared to a 6.5 percent contraction in the previous month.
- Intermediate goods output grew 13.9 percent compared with 12.4 percent growth in June.
- Primary goods output rose to 3.5 percent in July compared to a 0.5 percent fall in the previous month.
- Infrastructure and construction goods output expanded 2.1 percent compared with a 1.8 percent contraction in June.
(Corrects and earlier version that mis-stated that the pace of IIP growth was the fastest in eight months. It’s at a nine-month high in July)