India: Industrial production growth trends higher in August
October 12, 2017
Industrial output expanded 4.3% annually in August, which follows August’s 0.9% increase and marks the best reading since November of last year. The pick-up reflected a broad-based expansion across sub-components, with mining production and electricity supply growing at faster clips than in the previous month, and manufacturing output bouncing back to strong growth following a dip in August.
Employing a use-based classification, the fastest rates of output growth were seen in the primary and consumer non-durable segments, with consumer durable goods output moving back into positive territory. In addition, the production of capital goods rose for the first time in five months in August, an incipient sign that could suggest a small pick-up in capital expenditure growth.
August’s industrial production figure suggests that economic growth may have bottomed out at the outset of FY 2017, confirming that the negative effects related to the implementation of the Good and Services Tax (GST) were transitory. While the economy is not yet out of the woods, improving manufacturing PMI data and a turnaround in industrial output point to higher economic growth in the July-to-September period.
Author: David Ampudia, Economist