India’s November industrial growth slowest since June 2017
New Delhi: A decline in the manufacturing sector, especially that of capital goods, sharply decelerated India’s industrial output growth rate to 0.5 per cent in November, its lowest rise since June 2017.
The country’s industrial production had recorded a rise of 8.4 per cent in October and 8.5 per cent during the corresponding period of the previous fiscal.
As per the data furnished by the Central Statistics Office (CSO), the output rate of the manufacturing sector fell by (-) 0.4 per cent in November from a year-on-year rise of 10.4 per cent.
“The ‘Quick Estimates of Index of Industrial Production’ (IIP) with base 2011-12 for the month of November 2018 stands at 126.4, which is 0.5 per cent higher as compared to the level in the month of November 2017,” the CSO said in a statement.
“The cumulative growth for the period April-November 2018 over the corresponding period of the previous year stands at 5 per cent.”
On a YoY basis, mining production edged-up by 2.7 per cent and the sub-index of electricity generation increased by 5.1 per cent.
Among the six use-based classification groups, the output of primary goods which has the highest weightage of 34.04 grew by 3.2 per cent. The output of intermediate goods, which has the second highest weightage, fell by (-) 4.5 per cent.
Similarly, output of consumer non-durables inched lower by (-) 0.6 per cent and that of consumer durables by (-) 0.9 per cent.
In addition, output of infrastructure or construction good increased by 5 per cent, however that of capital goods by (-) 3.4 per cent.
“In terms of industries, ten out of the twenty three industry groups in the manufacturing sector have shown positive growth during the month of November 2018 as compared to the corresponding month of the previous year,” the statement said.
“… The industry group ‘Manufacture of fabricated metal products, except machinery and equipment’ has shown the highest negative growth of (-) 13.4 per cent followed by (-) 9.6 percent in ‘Manufacture of electrical equipment’ and (-) 7.3 in ‘Other manufacturing’.”
According to Sunil Kumar Sinha, Director – Public Finance and Principal Economist, India Ratings and Research: “Factory output growth after averaging 5.6 per cent till October in FY19 suddenly dipped to 0.5 per cent in November 2018. This is the worst growth performance of IIP since June 2017 when factory output had contracted by 0.3 per cent in response to the roll out of GST from July 2017.”
“But for the support coming from infrastructure and primary goods the industrial growth in November 2018 would have been negative as all other use based sectors namely capital goods, intermediate goods, consumer durables and consumer non-durables witnessed contraction in November 2018.”
Yes Bank’s Chief Economist Shubhada Rao said that “adverse base and the post festive winding down of momentum along with fewer working days” was expected to lower the IIP growth.
“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,” Rao said.
“However H2 average growth will be lower than H1, as also corroborated by advance estimates of GDP.”