India Industry November 2017

India: Industrial production surges in November

Industrial output growth accelerated sharply to an over five-year high of 8.4% in November from a revised 2.0% increase in October (previously reported: +2.2% year-on-year). The figure also came in well above market expectations of a 4.4% rise. The stronger-than-expected headline was the result of double-digit growth in manufacturing output, while both mining production and electricity supply also expanded at faster clips from the previous month in November.

Employing a use-based classification, healthy industrial production growth was driven by much-stronger infrastructure goods output and consumer non-durable goods production. On a similarly upbeat note, durable consumer goods output expanded in year-on-year terms in November following two consecutive months of contraction. Capital goods production—a traditional gauge of fixed investment growth—also increased a solid 9.4% in November, up from 6.6% in October.

Industrial production data for November comes on top of other high-frequency data that suggests the economic recovery remained well underway in the fourth quarter, including PMI, auto sales and merchandise exports. Although some items in this month’s report overstate the underlying industrial strength, the economy is undeniably making strong headway as GST- and demonetization-related effects wane and global demand remains strong.

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