Industrial production grows at 0.5 per cent, slowest since June 2017

Industrial production grows at 0.5 per cent, slowest since June 2017


Index of Industrial Production (IIP) with base 2011-12 for the month of November 2018 stands at 126.4, which is 0.5 per cent higher as compared to the level in the month of November 2017.

Image for representation. (Source: Reuters)

HIGHLIGHTS

  • Growth rate slowed due to shrinking of manufacturing sector
  • Capital good output declined by 3.4 per cent
  • Industrial output growth dropped 17-month low

Factory output, which measures economic activity in India through the Index of Industrial Production (IIP) saw growth of a mere 0.5 per cent. This is significant as the growth rate is the slowest since June 2017, according to government data.

Index of Industrial Production (IIP) with base 2011-12 for the month of November 2018 stands at 126.4, which is 0.5 per cent higher as compared to the level in the month of November 2017.

Industrial output growth dropped to a 17-month low of 0.5 per cent in November on account of contraction in the manufacturing sector, particularly consumer and capital goods.

The previous low was in June 2017, when IIP growth contracted by 0.3 per cent. The growth for October 2018 was revised upwards to 8.4 per cent from 8.1 per cent.

During the April-November period, industrial output grew 5 per cent as compared to 3.2 per cent in the same period of the previous fiscal year.

The manufacturing sector, which constitutes 77.63 per cent of the index, recorded a contraction of 0.4 per cent in November as against a growth of 10.4 per cent a year ago.

The mining sector posted 2.7 per cent growth during the month as against 1.4 per cent in November 2017. Power sector output also grew by 5.1 per cent from 3.9 per cent a year ago.

Capital goods output declined by 3.4 per cent, compared to 3.7 per cent growth a year ago. Consumer durables output also dipped by 0.9 per cent as against a growth of 3.1 per cent a year earlier. Consumer non-durable goods also saw a contraction of 0.6 per cent as compared to 23.7 per cent growth a year ago.

In terms of industries, 10 out of 23 industry groups in the manufacturing sector showed positive growth during November 2018.

As per use-based classification, the growth rates in November 2018 over November 2017 are 3.2 per cent in primary goods, (-) 4.5 per cent in intermediate goods and 5 per cent in infrastructure/construction goods.

A Reuters poll of economists had forecast a growth of 4.1 per cent for November.
November’s growth was much slower than an upwardly revised 8.4 per cent year-on-year increase in October, the data showed.

(with inputs from PTI)

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