Industrial output up at 4.2% in July on manufacturing growth

India’s factory output grew at 4.2% in July, faster than the 0.9% growth recorded in the same month of the previous year, amid signs of revival in consumer spending and investments by companies, data released on Friday showed.

The manufacturing sector, which accounts for more than 75% of India’s total industrial output, grew at 4.7% in July compared to a 0.3% contraction the same month of the previous year.

Growth in the factory output measured by the Index of Industrial Production (IIP) has been revised upwards to 4.36% from the earlier estimate of 3.8%.

“July 2015 is the second successive month of over 4% growth: manufacturing is slowly emerging as a leader of industrial growth increasing by 4.7%,” the finance ministry said.

Economic affairs secretary Shaktikanta Das was also upbeat. “July IIP data consistent with steady improvement in GDP numbers,” Das said on Twitter.

Consumer durables’ output grew at 11.4%, compared to a contraction of 20.4% in July 2014, in a sign that individuals and families are beginning to spend on goods such as cars and televisions.

Capital goods output, a broad marker for investment activity, grew 10.6% during July, from a 3% contraction the in same month of the previous year.

“It is encouraging to see the positive growth in manufacturing over the last few months and we hope that this growth and demand will pick up as we are nearing the festive season,” said Joytsna Suri, president of industry body Federation of Indian Chambers of Commerce and Industry (Ficci).

The contraction in consumer non-durables output, the second in the trailing three-month period, partly reflects the hit on rural consumer sentiment of back-toback weak harvests.

Consumer non-durable goods, however, contracted by 4.6% in July compared to a 5.2% growth in the year-ago period.

“The contraction in consumer non-durables output for the second time in the trailing threemonth period partly reflects the negative impact of back-to-back weak harvests on rural consumer sentiment,” said Aditi Nayar, senior economist at credit rating and research firm ICRA Ltd.