India's factory output grew 1.7 percent in January, lower than previous month's 2.4 percent, and 7.5 percent in January last year.
Factory output measured by the index of industrial production (IIP) is the closest approximation to gauge business activity in the economy.
Manufacturing sector output, which accounts for more than three-fourths of the entire index, grew at 1.3 percent in January, a sharp fall from an 8.7 percent growth a year ago for the same period, symptomatic of a slowdown in investment activities.
Electricity production growth stood at 0.8 percent for the month of January whereas mining activity, which accounts for over 14 percent of the entire index, stood at 3.9%.
Manufacturing sector growth was revised to 2.86 percent for the month of December whereas growth in the general sector was revised to 2.6 percent for the same month.
Consumer durables output grew at 1.8 percent in January as against a robust 7.6 percent year ago for the same period, signifying sluggish sales.
Capital goods output contracted 3.2 percent in January from a 12.4 percent growth year ago for the same period which mirrors a slowdown in production activities and a decrease in capacity building.
“The IIP data shows that neither investment goods nor consumer goods are doing well. There was an inventory build up so production activities have gone down. Infrastructure sector is doing well driven by government expenditure,” said Madan Sabnavis, chief economist, CARE Ratings.
Production of television sets contracted 49.7 percent. Air filters too contracted 53.8 percent.
Over the last few months IIP growth has been erratic, particularly in the manufacturing sector that accounts for more than 75 percent of all industrial production in the country.
For instance, in November, industrial growth had unexpectedly fallen to a 17-month low of 0.5 percent due to poor performance from the manufacturing sector, which contracted 0.4 per cent in November 2018, as against a 10.4 per cent growth seen in November 2017.
The manufacturing sector's gross value added (GVA), which is GDP minus taxes and is a more realistic proxy to measure economic activity, grew 6.7 percent in October-December 2018 compared to 8.9 percent in the same quarter of the previous year.
The consumer non-durable sector's output grew 3.8 percent in January compared to 5.3 percent in December and 10.5 percent in January 2018.