India: Industrial output tallies largest drop in nine months
April 11, 2014
Industrial production contracted 1.9% over the same month last year in February according to the Quick Estimate of the Index of Industrial Production (IIP). The reading contrasted both the revised 0.8% expansion observed in January (previously reported: +0.1% year-on-year) and the 0.9% expansion the market had expected. The figure marked the sharpest contraction since May 2013.
The decline was driven by a contraction in manufacturing output, which fell 3.7% over the same month last year and marked a deterioration over the flat reading tallied in January. Of particular importance was the sharp deterioration recorded in production of capital goods (February: -17.4% year-on-year; January: -4.1% yoy). In addition, mining decelerated in February and expanded just 1.4%, which was down from the 1.9% recorded in January and marked the largest fall since October 2011. Conversely, production in electricity improved markedly and expanded 11.5% in February, which was up from the 6.5% increase recorded in the previous month. The downward-sloping trend in industrial production continued in February with annual average growth in industrial output falling from January's 0.4% to 0.2% in February, the lowest level since November 2009.
FocusEconomics panelists expect industrial production to increase 3.9% in fiscal year 2014/2015, which is down 0.2 percentage points from last month's forecast. For fiscal year 2015/2016, the panel expects industrial output to expand 5.6%.