Industrial output growth slides to three-month low

A view of an apparel industry. According to industrial output growth, the apparel segment contracted 17.9%, worse than the 17.1% decline clocked in August.
| Photo Credit: The Hindu

India’s industrial output growth slid to a three-month low of 5.8% in September from a 14-month high of 10.3% in August, with manufacturing growth halving to 4.5% from the 9.3% recorded in the previous month.

Consumption demand appeared weak with consumer durables’ production rising just 1% while non-durables’ grew 2.7% in September, despite a beneficial base effect from last year when both segments tanked by 5.5% and 5.7%, respectively.

Electricity and mining growth also moderated to 9.9% and 11.5%, respectively. Spliced on the basis of usage, primary goods grew the fastest at 8%, cooling from 12.4% in August, followed by infrastructure and construction goods that were up 7.5% and capital goods which rose 7.4%. Intermediate goods output grew 5.8%.

While only seven of 23 manufacturing sectors had clocked a contraction in August, nine segments saw drops in output in September, led by furniture (-20.2%). The apparel segment contracted 17.9%, worse than the 17.1% decline clocked in August.

Computers and electronics’ output fell 8.9%, while the contraction in chemicals widened from 4.3% in August to 5.6% in September. “Other Manufacturing”, that encompasses sectors that are not broadly categorised, fell 13.5%.

Overall industrial output is up 6% in the first half of this year, with mining up 8.7%, electricity 6.1% and manufacturing 5.7%. Most economists expected September’s Index of Industrial Production or IIP to reflect sharper growth.

ICRA’s chief economist Aditi Nayar, who had estimated an 8% uptick, said the numbers were influenced by an unfavorable base, a shift in the festive calendar and excess rainfall in September.

“While the moderation was broad-based across all sub-sectors and use-based categories, the performance of consumer goods was especially tepid, resulting in the manufacturing sector’s performance trailing that of mining and electricity in September,” she said.