India: Industrial production growth moderates slightly in February
Industrial production growth eased to 7.1% in annual terms in February, down from January’s revised 7.4% increase (previously reported: +7.5% year-on-year) and coming in above market expectations of a 6.8% rise. The small moderation was driven by a drop in mining output and a deceleration in electricity generation growth, which were partially offset by an uptick in manufacturing production Manufacturing recorded an annual rate of expansion above 8.0% for a third consecutive month.
On a use-based classification, February’s mild slowdown was the result of softer production of consumer non-durable goods, which moderated from 11.0% growth in annual terms in January to 7.4% growth in February. Conversely, growth of capital goods output—a proxy for domestic fixed investment—accelerated rapidly in February to 20.0%, up from a revised 12.8% expansion in January (previously reported: +14.6% yoy.). Consumer durable production also ticked up in the month, while infrastructure output growth posted strong gains in February, underpinned by a pick-up in steel and cement production.
Despite the sequential slowdown, February’s performance was solid nonetheless and contributed to the upward trend industrial production has seen in recent months. Moreover, healthy industrial output supports expectations of the strong economic recovery many FocusEconomics panelists have penciled in for fiscal year 2018.