India: Industrial production declines for the first time in five months
July 12, 2013
Industrial production plunged for the first time after four consecutive monthly increases. In May, industrial output contracted 1.6% over the same month last year, according to the quick estimate for the index of industrial production (IIP). The reading contrasts both the revised 1.9% expansion registered in April (previously reported: +2.0% year-on-year) and market expectations that had output rising 1.5%.
The contraction was led by a deterioration in mining and quarrying (April: -3.3% yoy; May: -5.7% yoy) as well as in manufacturing output (April: +2.3% yoy; May: -2.0% yoy). On a use-based classification, production of consumer goods, particularly of durable consumer goods deteriorated notably compared to the previous month. On the other hand, electricity generation reported an improvement compared to the previous month.
As a result of the monthly drop, the trend now points downwards, with annual average growth in industrial production falling from 1.4% in April to 1.1% in May.
FocusEconomics panellists expect industrial production to increase 4.6% in the fiscal year 2013/14, which is down 0.1 percentage points from last month's forecast. For the fiscal year 2014/15, the panel anticipates industrial output to expand 6.3%.
Author: Ricardo Aceves, Senior Economist