India: Industrial production continues to lose steam
February 11, 2011
In December, industrial output grew 1.6% over the same month the year before, according on the so-called quick estimate for the index of industrial production (IIP). The print came in below November's already feeble 3.6% increase (previously reported: 2.7% year-on-year) and represented the slowest pace in 20 months. Market analysts, had expected a 2.0% expansion. The deceleration was the result of slower growth in the mining and manufacturing sectors. The manufacturing sector, which accounts for nearly three quarters of total industrial output, slowed to a 1.0% expansion (November: +3.2% yoy), while mining output moderated to a 3.8% increase (November: +7.4% yoy). In fact, an improvement was only seen in electricity generation, which picked up from 4.6% in November to 6.0% in December. On a use-based classification, the monthly deceleration was the result of a 13.7% contraction in the production of capital goods (November: +12.8% yoy) as well as slower growth in the production of basic goods. After improving for more than a year, the trend in industrial production stabilized between May and October 2010 and started to point downwards in November. In December, the decline steepened further, with, annual average growth in industrial output dropping to 10.4% from 11.9% in November. The national statistical office recently stated that it expects industrial output to rise by 8.0% in the current fiscal year, ending March 2011.