India: Industrial production contracts for second consecutive month
August 12, 2013
Industrial production fell for the second consecutive month after having increased for four months in a row. Industrial output contracted 2.2% in June over the same month last year, according to the Quick Estimate for the Index of Industrial Production (IIP). The reading slightly improved over the revised 2.8% decline observed in May (previously reported: -1.6% year-on-year), but did not meet market expectations of a 1.2% drop.
The contraction was the result of a drop in mining and quarrying (May: -5.9% yoy; June: -4.1% yoy), as well as in manufacturing output (May: -3.6% yoy; June: -2.2% yoy). Regarding a use-based classification, output of consumer goods, particularly of durable consumer goods, showed a notable contraction.
As a result of the milder drop in June, the trend flattened, with annual average growth in industrial production remaining unchanged at May's 1.0%.
FocusEconomics panellists expect industrial production to increase 3.9% in fiscal year 2013/2014, which is down 0.4 percentage points from last month's forecast. For fiscal year 2014/2015, the panel anticipates industrial output to expand 5.8%.
Author: Ricardo Aceves, Senior Economist