India Industry August 2016


Industrial production improves in August

The fall in industrial production moderated in August, after recording the largest contraction since November 2015 in July. Industrial output contracted 0.7% compared to the same month last year, which was a less pronounced decline than July’s revised 2.5% decrease (previously reported: -2.4% year-on-year). The print nevertheless undershot market analysts’ expectations of a greater improvement to a 0.2% contraction.

August’s result was driven by gains in the manufacturing sector. Manufacturing output improved from a 3.5% contraction in July to a 0.3% fall in August. However, mining production swung from a 0.9% expansion to a 5.6% fall in August—the worst result since May 2013. Electricity output grew 0.1%, down from July’s 1.6% increase.

On a use-based classification, the production of basic and capital goods gained steam in August. However, output of intermediate and consumer goods slowed.

The trend continued to point downward. Annual average growth in industrial production eased from July’s 1.3% to 0.7%, which represented a 28-month low.

FocusEconomics panelists expect industrial production to increase 6.0% in fiscal year 2016, which is unchanged from last month’s forecast. For fiscal year 2017, the panel expects industrial output to expand 6.6%.

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India Industry Chart

India Industry August 2016

Note: Year-on-year and annual average variation of industrial production index in %.
Source: Ministry of Statistics and Programme Implementation (MOSPI) and FocusEconomics calculations.

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