IIP growth falls to 3-month low, rises yr-on-yr

Factory output had grown at 3.3 per cent in September last year. Cumulatively, during April-September, the first half of the financial year, factory output has grown 6.0 per cent as against 7.1 per cent in the year-ago period.

As per the IIP data, nine out of the 23 sectors in manufacturing registered a contraction in September, with furniture, apparel and computer and electronics amongst the significant non-performers. Among the 14 positive performing sectors, manufacture of basic metals, beverages, and motor vehicles, trailers and semi-trailers performed better.

In terms of the use-based industries, consumer durables output recorded growth of 1 per cent in September as against (-) 5.5 per cent in the year-ago period, reflecting weaker consumption demand. Consumer non-durables output, which reflects fast-moving consumer goods, registered a 2.7 per cent growth in September as against (-) 5.7 per cent in the year-ago period. Primary, infrastructure/construction, and capital goods recorded growth rates of 8.0 per cent, 7.5 per cent and 7.4 per cent, respectively, in September this year.

Economists said the trend for industrial output will depend on consumption recovery. “The overall performance is encouraging and should lead to stable industrial growth for the year. The crux will be pick up in consumption and investment. Readymade garments has been a low performer due to exports being low. October has indicated that exports could have turned the corner and if sustained can provide the requisite boost for the textiles sector,” Madan Sabnavis, Chief Economist, Bank of Baroda said.

However, Sabnavis said contraction in electronics and computers manufacturing, which has come in at (-) 15.1 per cent for April-September has been a “major disappointment as this is the leading sector for the PLI scheme.