India: Industrial output contracts unexpectedly in November
January 10, 2014
In November 2013, industrial production plunged 2.1% over the same month of the previous year, according to the Quick Estimate of the Index of Industrial Production (IIP). The reading, which followed the revised 1.6% decrease observed in October (previously reported: -1.8% year-on-year), took the market by surprise, as analysts had expected an expansion of 1.0%. The print represents the lowest reading since May 2013, which underscores the fragility of the recovery in the industrial sector.
The contraction in November was the result of a notable deterioration in manufacturing production (November: -3.5% yoy; October: -1.8% yoy). Conversely, mining and quarrying (November: +1.0% yoy; October: -3.2% yoy) and electricity production (November: +6.3% yoy; October: +1.3% yoy) registered improvements over the previous month. Annual average growth in industrial output fell from 0.5% in October to 0.4% in November.
FocusEconomics panelists expect industrial production to increase 0.5% in fiscal year 2013/2014, which is down 0.1 percentage points from last month's forecast. For fiscal year 2014/2015, the panel expects industrial output to expand 4.0%, which is unchanged over the previous month's forecast.
Author: Ricardo Aceves, Senior Economist