India: Industrial output decelerates
September 10, 2011
In July, industrial production grew 3.3% over the same month last year, according to the so-called quick estimate for the index of industrial production (IIP). The figure represents the slowest pace of expansion since October 2009, less than half the 8.8% expansion tallied in June, and below market expectations that had industrial production rising 6.2%. The moderation was entirely driven by slower growth in the manufacturing sector, which plummeted from a 10.3% increase in June to a paltry 2.3% rise in July. In contrast, growth in both the mining as well as the electricity sectors accelerated over the previous month. On a use-based classification, the deterioration was mainly driven by a contraction in the production of capital goods, which swung from a robust 38.2% expansion in June to a 15.2% contraction in July. Intermediate goods also contracted, whereas consumer goods increased mainly driven by higher output of consumer durables. Owing to the weak print, the trend in industrial production deteriorated, with annual average growth falling from 7.5% in June to 7.0% in July.