Man­u­fac­tur­ing drags Nov IIP to 17-month low

The Hindu Business Line - - FRONT PAGE -

Fac­tory out­put growth slumped to a 17-month low of 0.5 per cent in Novem­ber 2018, plung­ing from 8.5 per cent in the same month of the pre­vi­ous year.

The lat­est In­dex of In­dus­trial Pro­duc­tion (IIP) print was also lower than the up­ward re­vised 8.4 per cent year-on-year growth recorded in Oc­to­ber 2018.

How­ever, the good news is that over­all IIP growth for AprilNovem­ber 2018 came in at 5 per cent, much higher than the 3.2 per cent in the cor­re­spond­ing pre­vi­ous pe­riod.

Man­u­fac­tur­ing dis­ap­points

The main rea­son for the slump in fac­tory out­put growth in Novem­ber 2018 is the poor show from the man­u­fac­tur­ing sec­tor, which con­tracted 0.4 per cent in Novem­ber 2018, against the ro­bust 10.4 per cent growth seen in Novem­ber 2017. While min­ing grew 2.7 per cent (1.4 per cent), elec­tric­ity out­put grew 5.1 per cent (3.9 per cent).

The cu­mu­la­tive YoY growth in min­ing, man­u­fac­tur­ing and elec­tric­ity in the April-Novem­ber 2018 pe­riod was 3.7 per cent, 5 per cent and 6.6 per cent, re­spec­tively.

Madan Sab­navis, Chief Econ­o­mist, CARE Rat­ings, at­trib­uted the sharp fall in IIP growth to three main fac­tors: “Lower post fes­ti­val de­mand, lower ru­ral spend­ing and a liq­uid­ity crunch af­fect­ing lend­ing for auto, es­pe­cially trac­tors,” he told Busi­nessLine.

Su­nil Sinha, Prin­ci­pal Econ­o­mist, In­dia Rat­ings, said fac­tory out­put growth, after av­er­ag­ing 5.6 per cent till Oc­to­ber, sud­denly dipped to 0.5 per cent in Novem­ber 2018.

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