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Nov 12, 2012, 07.16 PM IST | Source: Moneycontrol.com

IIP: Manufacturing fumbles again, weakness to continue

CRISIL Research has come out with its report on IIP data for September 2012. According to the research firm, Industrial weakness therefore is expected to continue in the near term and industrial output growth in 2012-13 appears to be heading towards a performance which will be even worse than the last fiscal.

CRISIL Research has come out with its report on IIP data for September 2012. According to the research firm, Industrial weakness therefore is expected to continue in the near term and industrial output growth in 2012-13 appears to be heading towards a performance which will be even worse than the last fiscal.

Industrial output once again contracted by 0.4 per cent in September 2012. Even the growth for the previous month has been revised downwards to 2.3 per cent from 2.7 per cent reported earlier. Industrial output growth for the first half of this fiscal now stands at mere 0.1 per cent as against 5.1 per cent for the same period last fiscal. Although government has announced some reforms and policy measures to revive industrial growth recently, they will take a while to play out. Industrial weakness therefore is expected to continue in the near term and industrial output growth in 2012-13 appears to be heading towards a performance which will be even worse than the last fiscal.

Manufacturing output having the highest weight in the IIP, witnessed a contraction of 1.5 per cent in September 2012. Some relief although came from mining and electricity sectors which grew at 5.5 and 3.9 per cent respectively. However, the growth in mining sector output was high on account of low base of last year. A glance at the used based classification of industry suggest that growth slowdown is not only well entrenched it is now also widespread. While capital goods output contracted by 12.2 per cent, consumer durables contracted by 1.7 per cent. Growth in basic and intermediates goods also remained in the low single digit in September 2012.

Although core sector output growth in September 2012 was a pleasant surprise, it failed to push the overall industrial growth in to the positive territory. At 5.1 per cent it posted its highest growth since the start of 2012. The key sectors that contributed to core sector growth in September 2012 are coal, cement, refinery products and fertilizer which grew by 21.4, 13.4, 11.4 and 5.7 per cent respectively.

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Disclaimer: CRISIL Limited has taken due care and caution in preparing this Report. Information has been obtained by CRISIL from sources, which it considers reliable. However, CRISIL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. CRISIL Limited has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this Report. The Centre for Economic Research, CRISIL (C-CER) operates independently of and does not have access to information obtained by CRISIL's Ratings Division, which may in its regular operations obtain information of a confidential nature that is not available to C-CER. No part of this Report may be published / reproduced in any form without CRISIL's prior written approval.

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