Industrial production rises 1.8% in November on growth in manufacturing sector after 3 months of contraction

The industrial production is back in the positive zone as it increased 1.8 percent in November after three months of contraction on account of growth in the manufacturing sector, according to government data which was released on Friday. The Index of Industrial Production (IIP) contracted by 1.4 percent in August, 4.3 percent in September and 4 percent (revised) in October last year. The factory output had grown by 0.2 percent in November 2018.

#BreakingNews | IIP for November comes in at 1.80% Vs CNBC-TV18 poll of 0.93%#IIP pic.twitter.com/cImSARYpHC

— CNBC-TV18 (@CNBCTV18Live) January 10, 2020

Industrial production, or factory output, is the closest approximation for measuring the economic activity of the country’s business landscape. According to the National Statistical Office (NSO) data, the growth in the manufacturing sector was 2.7 percent as against a contraction of 0.7 percent in the same month last year. Electricity generation turned negative (-) 5 percent as against a growth of 5.1 percent in November 2018. Mining sector output decelerated to 1.7 percent from 2.7 percent in the year ago month. The IIP growth during April-November period of the current fiscal came in at 0.6 percent, down from 5 percent in the same period of 2018-19. The data for the November month further revealed that production of capital goods, a barometer of investment, contracted by 8.6 percent. This compares with a contraction of 4.1 percent in November 2018. [caption id=“attachment_5154751” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] Also, there was a contraction of 3.5 percent in the infrastructure and construction goods segment. While consumer durables output was in the negative territory, the consumer non-durable segment or FMCG goods recorded a small growth of 2 percent (against a contraction of 0.3 percent in November 2018). As per the NSO data, 13 out of the 23 industry groups in the manufacturing sector showed positive growth during November 2019 as compared to the corresponding month of the previous year. Commenting on the data, Rumki Majumdar, Economist, Deloitte India said the latest IIP numbers came as a relief to the market and policy makers as the activity in the industry sector showed some traction. On a month-on-month basis, growth has been broad-based with capital and durable goods showing considerable improvement, Majumdar said, and added that relative to the previous year, growth in manufacturing has been impressive, although it could not build on the past month’s growth momentum. Karan Mehrishi, the Lead Economist at Acuité Ratings & Research, said, “Minor recovery in the IIP is a function of a favourable base effect, which will continue to benefit until the end of the financial year. On these lines, manufacturing, which was contracting continuously for the previous three months has received a fillip from the contraction in November 2018 (base year). Segments without such benefit are maintaining their negative outlook, baring consumer non-durables (use-based).” The industry group ‘manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ has shown the highest positive growth of 23.2 percent followed by 12.9 percent in ‘manufacture of basic metals’. On the other hand, the industry group ‘other manufacturing’ has shown the highest negative growth of (-) 13.5 percent followed by (-) 12.6 percent in ‘manufacture of motor vehicles, trailers and semi-trailers’. (With PTI inputs)