Core sector output at 6-month low; crude, natural gas hit most

This may weigh down the growth of the index of industrial production (IIP) in July from 6.7 per cent in June, given that the core industries make up for 40.3 per cent of the IIP.

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Sequentially, the output of the eight infrastructure sectors witnessed a 2.3 per cent drop in July. However, on a year-on-year basis, only two sectors — crude oil and natural gas — posted a slowdown. While crude oil output contracted 3.8 per cent in July, against a 1.7 per cent drop in the previous month, natural gas production shrank, albeit mildly (0.3 per cent), after a gap of 16 months.

Growth in the output of eight core infrastructure sectors decelerated sharply for a second straight month to hit a six-month low of 4.5 per cent in July from a year ago, as a conducive base effect waned considerably. The growth was as much as 13.2 per cent in June and 19.3 per cent, a 13-month peak, in May.

This may weigh down the growth of the index of industrial production (IIP) in July from 6.7 per cent in June, given that the core industries make up for 40.3 per cent of the IIP.

All eight sectors saw a month-on-month slowdown in growth, data from Commerce & Industry Ministry showed Wednesday. Sequentially, the output of the eight infrastructure sectors witnessed a 2.3 per cent drop in July. However, on a year-on-year basis, only two sectors — crude oil and natural gas — posted a slowdown. While crude oil output contracted 3.8 per cent in July, against a 1.7 per cent drop in the previous month, natural gas production shrank, albeit mildly (0.3 per cent), after a gap of 16 months.

Explained

May weigh on IIP

The weak growth in the output of eight core infrastructure sectors may weigh down the growth of the index of industrial production in July from 6.7% in June, given that the core industries make up for 40.3% of the IIP.

As the base normalises, growth in the core infrastructure sectors will likely remain under pressure in August, before somewhat recovering in September, as the base turns favourable again, some analysts said.

Yet, the core index still grew at a reasonably decent rate of 6.1 per cent in July from the pre-pandemic level (same month of 2019). FE