India Industry July 2016


Industrial production swings to contraction in July

Industrial production deteriorated in July, recording the largest fall since November 2015. Industrial output contracted 2.4% compared to the same month last year, which contrasted June’s revised 2.0% increase (previously reported: +2.1% year-on-year). The print notably undershot market analysts’ expectations of a deceleration to 1.4% growth.

July’s downturn was driven by broad-based deteriorations in the index. Manufacturing output swung from a 0.7% expansion in June to a 3.4% contraction in July, a three-month low. In addition, electricity output fell to a 1.6% expansion (June: +8.3% yoy) and mining production grew a meagre 0.9% (June: +5.3% yoy).

On a use-based classification, the production of basic, intermediate and consumer goods all lost steam. In addition, the contraction in capital goods production intensified.

As a result, the trend continued to point downward. Annual average growth in industrial production eased from June’s 1.9% to 1.3%, which represented a 21-month low.

FocusEconomics panelists expect industrial production to increase 6.2% in fiscal year 2016, which is unchanged from last month’s forecast. For fiscal year 2017, the panel expects industrial output to expand 6.9%.

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India Industry Chart

India Industry July 2016 0

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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