Large scale destocking and inventory clearance by companies ahead of GST's rollout in July may have brought down production
Given the contraction in the same month last year, the surge in industrial output in January could be partly due to base effect â€” a statistical phenomenon that makes even small changes look large.
Cement was the most telling example, with output declining 13.3 percent from a fall of 8.7 percent in December as the construction industry was badly affected by demonetisation.
India‘s factory output grew 5.7 percent in November compared to -1.9 percent in October despite expectation of households putting off purchases and companies deferring investment hit by an economy-wide cash-crunch.
Factory output could get worse in the coming months with households putting off purchases and companies deferring investment hit by an economy-wide cash-crunch following the unexpected ban on Rs 500 and Rs 1,000 currency notes.
India‘s factory output grew 0.7 percent in September, recovering only marginally from the previous month‘s fall of (-) 0.7 percent, data released on Friday showed.
RBI governor Urjit Patel will present his maiden monetary policy review amid mixed signals from the broader economy.
Index of Industrial Production (IIP) tells you whether the manufacturers of industrial goods have either increased or cut their production. Consumer Price Index directly affects the common man. It gives an idea of the prices of goods and services that he or she buys from the neighbourhood store.
The turnaround reduces pressure on the Bank of Japan to expand its already massive stimulus program as early as Friday, although it is expected to slash its rosy economic and price growth forecasts.
Industrial production grew 5 percent in February on account of improvement in manufacturing activity and a rebound in consumer non-durables. Factory output, measured by Index of Industrial production (IIP) was 2.6 percent in January.
The afterglow of Prime Minister Narendra Modi's election victory in May helped India's lumbering economy register its fastest growth in two-and-a-half years for the quarter ending in June.
"This is the time when mining remains weak because of monsoons, so it will not deliver a good number. Manufacturing is also expected to lag," said Upasna Bhardwaj, economist at ING Vysya Bank.
Labour demand continued to improve and household spending rose more than expected, providing hope that domestic demand could underwrite a recovery after lacklustre growth in the fourth quarter of last year.
India's new central bank chief, who has raised policy interest rates twice since taking office in September to tackle price pressures, said last month no single data point will determine its next move on curtailing high inflation.
Optimism that the world's No. 2 economy is not sliding into a protracted downswing has been boosted by data in the past month showing activity stabilising as 2013 winds down.
In a more positive sign, factory output is forecast to have risen 3.5 percent in September from a year earlier, much faster than August's 0.6 percent growth.
The index, which gauges business activity in Indian factories but not utilities, has hovered near that 50 mark from May but falling orders dragged it under in August for the first time in more than four years.
The poll showed output at factories, mines and utilities shrank an annual 0.8 percent, after contracting 2.2 percent in June, according to the median consensus of 22 economists.
The bleak Purchasing Managers' Index (PMI) comes hard on the heels of data on Friday that showed Asia's third-largest economy grew at it slowest quarterly rate in the three months to June since the global financial crisis, suggesting more pain ahead.
The HSBC/Markit Purchasing Managers' Index for June was recorded at 48.2; it's lowest since September 2012 and down from May's numbers of 49.2.
Sarah Hewin of Standard Chartered belives Germany is strong in terms of its fundamentals and will give good oppurtunity in the future.
Indian economy would grow at a rate of between 5 and 5.5 per cent in current fiscal and could expand by 7 per cent in 2013-14, said Plan panel Deputy Chairman Montek Singh Ahluwalia.
The December factory output is likely to remain in the positive territory and in the range of two-three percent but in the months to come it is expected to remain "subdued", global research firm Dun and Bradstreet says.
Westpac says the rupee could enjoy a positive start to 2013 as the recent rebound in factory output, PMI data, along with equity market resilience is pointing towards a better growth environment for India through first half of 2013.
Leading brokerage house Nomura India today played down the marginal 0.4 percent contraction in the September factory output numbers, saying the industrial cycle has bottomed out.