India's September core sector growth cools to four-month low of 8.1%

In September 2022, India’s eight core sectors – which include coal, crude oil, natural gas, refinery products, fertiliser, cement, electricity, and steel – had grown by 8.3 percent.

India's eight core sectors posted a growth of 8.1 percent in September - the lowest in four months - according to data released by the Ministry of Commerce and Industry on October 31.

At 8.1 percent, the growth in India's eight key infrastructure industries - coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas - last month is lower than August's 14-month high of 12.1 percent, which has now been revised up to 12.5 percent, the commerce ministry said on October 31. The impressive performance in August was largely due to a favourable base effect.

In September 2022, core sector growth was 8.3 percent.

For April-September, growth in core sector output is 7.8 percent compared to 9.8 percent in the first half of 2022-23.

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"A pickup in rainfall expectedly flattened the core sector expansion in September," said Aditi Nayar, Chief Economist at ICRA.

The drop in core sector growth in September was primarily driven by the cement industry, whose output increased by just 4.7 percent - the lowest in six months - after a huge 19.3 percent rise in August. In fact, all but one of the eight industries posted lower output growth numbers, with crude oil production even falling 0.4 percent year-on-year.

The only industry to post better numbers in September was fertiliser, whose production grew at a faster rate of 4.2 percent as opposed to 1.8 percent in August.

With core sector growth falling sharply in September from August, industrial growth, as per the Index of Industrial Production (IIP), will also likely post a fall.

Data released on October 12 by the statistics ministry showed India's IIP growth jumped to a 14-month high of 10.3 percent in August, well above expectations of 9.1 percent. With the eight core industries making up more than 40 percent of the weight of the IIP, the former is seen as a lead indicator of industrial growth.

As such, a weaker core sector growth number in September may mean a lower IIP growth figure for the month, data for which will be released on November 10.