India’s industrial output grew 12.3% in June, moderating from 19.6% this May, led by a 16.4% uptick in electricity and 12.5% growth in manufacturing. Mining activity grew 7.5% in the month.
The Index of Industrial Production (IIP), however, grew only 0.14% over May 2022 levels, with manufacturing being the only sector to report a sequential uptick in output in June, rising 1.34%.
Production of consumer durables and capital goods led the growth trajectory among use-based categories for the second month in a row, rising 26.1% and 23.8%, respectively, in June.
This is the third successive month of output growth for consumer durables after six months of contraction. By contrast, consumer non-durables’ output growth was 2.9% in June after a 0.9% rise in May.
Primary goods output rose 13.7%, followed by intermediate goods (11%) and infrastructure/construction items which grew 8%. However, these three sectors reported a sequential decline from May’s output levels, with primary goods slipping 3.8%, intermediate goods 2.9% and construction goods 2.7%.
Although growth in consumer non-durables is still low, it was the highest in five months, noted India Ratings economists Sunil Kumar Sinha and Paras Jasrai.
“A rebound in this sector is important for a durable and sustained industrial recovery which so far has been witnessing a K-shaped recovery (tepid growth in consumer non-durables and high growth in consumer durables segment),” they said, adding that a moderate recovery may occur in coming months with the progression of monsoon.
“Given the moderation in the year-on-year performance recorded by most high frequency indicators in July 2022, such as electricity generation and non-oil exports, we expect the IIP growth to ease to high single digits,” said ICRA chief economist Aditi Nayar,
She attributed the broad-based drop in the IIP growth rate to effects of a ‘normalising base’. Yet, manufacturing growth spurred the numbers higher than the 10.2% estimated by the rating agency.
