Moneycontrol
Last Updated : Jan 11, 2019 06:57 PM IST | Source: Moneycontrol.com

Factory output growth plummets to 17-month low of 0.5% in November

Factory output, measured by the Index of Industrial Production (IIP), is the closest approximation for measuring economic activity in the country's business landscape.

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India's factory output growth hit a 17-month low of 0.5 percent in November as compared with 8.4 percent in October, mainly due to a de-growth in manufacturing output, data released by the statistics office on January 11 showed.

Factory output, measured by the Index of Industrial Production (IIP), is the closest approximation for measuring economic activity in the country's business landscape.

IIP grew 8.5 percent in November, 2017. Cumulative growth during April-November was 5 percent.

"This is the worst growth performance of IIP since June, 2017 when factory output had contracted by 0.3 percent in response to the rollout of GST from July, 2017. Despite IIP growth showing 5 percent or higher growth in 8 out of past 12 months, India Ratings has consistently highlighted that industrial growth is still not on sound footing. The key reason for this view has been high variability in industrial growth across sectors and within sectors on month on month basis," said Sunil Sinha, Principal Economist, India Ratings.

Manufacturing sector output, which accounts for more than three-fourths of the entire index, saw deceleration of -0.4 percent in November from 7.9 percent a month ago and 10.4 percent a year ago.

Electricity production growth grew 5.1 per cent in November from 10.8 percent a month ago and 3.9 percent a year ago. Mining activity, which accounts for over 14 percent of the entire index grew 2.7 percent in November from was at 7 percent in October and 1.4 percent last year.

Consumer durables output also fell to -0.9 percent, from 17.6 percent in October while consumer non-durables came in at -0.6 percent in November as compared to 7.9 percent in the previous month.

Intermediate goods also showed de-growth of (-) 4.5 percent in November from 1.8 percent in October and 6.5 percent a year ago.

"While the adverse base and the post festive winding down of momentum along with fewer working days was expected to lower the IIP growth, the magnitude of correction has been sharper. Tighter domestic financing conditions may also have played a part. Going forward, incrementally improving liquidity, normalisation post festive related disruptions and election related spending could get growth supportive enabling higher prints versus today's IIP number," said Shubhada Rao, Chief Economist, Yes Bank.

First Published on Jan 11, 2019 05:42 pm
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