India: Industrial production swings to contraction in July
September 12, 2016
Industrial production deteriorated in July, recording the largest fall since November 2015. Industrial output contracted 2.4% compared to the same month last year, which contrasted June’s revised 2.0% increase (previously reported: +2.1% year-on-year). The print notably undershot market analysts’ expectations of a deceleration to 1.4% growth.
July’s downturn was driven by broad-based deteriorations in the index. Manufacturing output swung from a 0.7% expansion in June to a 3.4% contraction in July, a three-month low. In addition, electricity output fell to a 1.6% expansion (June: +8.3% yoy) and mining production grew a meagre 0.9% (June: +5.3% yoy).
On a use-based classification, the production of basic, intermediate and consumer goods all lost steam. In addition, the contraction in capital goods production intensified.
As a result, the trend continued to point downward. Annual average growth in industrial production eased from June’s 1.9% to 1.3%, which represented a 21-month low.