India’s eight core sectors’ output growth virtually flattened in October, stumbling to just 0.1% from 7.8% in September, with cement and refinery products slipping into contraction and electricity generation rising just 0.4%.
In what analysts reckoned was the weakest core sectors’ performance since February 2021, partly driven by base effects, steel output rose 4% in October, reflecting the slowest growth since this July, while coal and fertilizer production grew 3.6% and 5.4%, respectively.
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Cement production fell 4.3% compared with October 2021 and was also 2.4% below the September 2022 output. Coal, fertilizers, cement and electricity had clocked double-digit output growth in September.
The Index of Core Industries released by the Commerce and Industry Ministry, which constitutes about 40% of the Index of Industrial Production (IIP), was unchanged month-on-month at 138, signalling a flat sequential trend as well.
Natural gas production shrank for the fourth successive month, by 4.2% in October, the sharpest decline in at least 12 months. Crude oil output dipped for the fifth month in a row, but the contraction was the lowest in four months at 2.2%.
While the numbers signal weakening activity, the high base effect of 8.7% growth recorded last October also played a role, noted Bank of Baroda chief economist Madan Sabnavis. If consumer goods record a revival in October, the IIP growth for the month could also be low, at around 2% to 3%, he estimated.
“We expect the core sector output to witness only a moderate improvement in the second half of the year due to the seasonal factor, but it will continue to be dragged down by the weakness in exports,” said Suman Chowdhury, chief analytical officer at Acuité Ratings & Research.
“On the whole, the performance has been ordinary and does not signal a strong recovery in the months to come though the growth number will improve for sure,” Mr. Sabnavis said.