India: Industrial production accelerates
May 12, 2011
In March, industrial output grew 7.3% over the same month the year before, according to the so-called quick estimate for the index of industrial production (IIP). The reading came in at nearly twice the 3.7% increase tallied in February (previously reported: +3.6% year-on-year) and surprised the market on the upside, as analysts expected a weaker 3.8% expansion. Nevertheless, March's development was more aligned with other sector indicators, such as the HSBC Manufacturing PMI, which is pointing to sustained growth. The acceleration over the previous month was mainly driven by a 7.9% expansion (February: +3.6% yoy) in manufacturing, the sector which accounts for around three quarters of total industrial output. Moreover, electricity generation accelerated over February, whereas mining output decelerated somewhat. On a use-based classification, the figure was mostly the result of an improvement in the production of capital goods, which swung from an 18.2% contraction in February to a 12.9% expansion in March. All the remaining sub-categories decelerated over February, most notably the production of consumer durables, which moderated from a 23.5% expansion in February to a 12.3% increase. Despite the pick up in March, the trend in industrial production continued to moderate, resulting in a 7.8% expansion for the full fiscal year 2010/11 (February: +8.5% annual average yoy).