India: Industrial production growth remains healthy in September
November 10, 2017
In September, industrial output was resilient despite a strong base effect, rising 3.8% from the same month of the previous year. The figure followed an upwardly revised 4.5% expansion in August (previously reported: +4.3% year-on-year) and reflected steady growth in manufacturing output, which was, however, partially offset by slower growth rates in mining and electricity production.
Employing a use-based classification, output growth accelerated for capital and non-durable consumer goods. Similarly, intermediate goods output expanded for the first time in four months in September. However, consumer durables production contracted in September following a strong increase in August, which suggests that the sector is still reeling from the implementation of the Goods and Services Tax (GST).
All told, the September report reinforces the view among our panelists that economic growth bottomed out in the first quarter of FY 2017, with high-frequency data such as industrial production pointing to a nascent recovery being well underway. Nonetheless, uncertainty linked to the GST will continue to weigh on smaller firms as well as keep business sentiment subdued, acting as a damper to overall growth.
Author: David Ampudia, Economist