India: Contraction in industrial production intensifies in January
March 11, 2016
Industrial production deteriorated in January, indicating signs of sluggishness in India’s economy. In January, industrial output fell 1.5% compared to the same month last year, which marked a more pronounced drop from December’s 1.2% fall. The reading surprised market analysts, who had expected a more modest 0.5% drop.
January’s deeper fall was driven by a sharp contraction in the manufacturing sector along with slower growth in mining output. Manufacturing production dropped 2.8% after falling 2.2% in December. Mining output lost steam, decelerating from a 2.7% increase in December to a 1.2% expansion in January. While growth in electricity production accelerated to 6.6% (December: +3.2% year-on-year).
On a use-based classification, the production of capital goods plummeted, while consumer goods recorded flat growth. However, production of intermediate and basic goods picked-up in January.
As a result of the monthly reading, the trend continued to point downward. Annual average growth in industrial production eased from December’s 3.3% to 2.9%.