BUSINESS

Industrial growth slows in May

Sequentially, May marks the seventh straight month of growth

ndustrial production seems to be growing slower than earlier thought, with provisional figures for May 2015 showing the index of industrial production’s (IIP) growth at 2.7 per cent, down from 3.4 per cent in April. However, May marks the seventh straight month of growth.

The IIP for April too has been revised downwards to 3.4 per cent from the earlier estimate of 4.1 per cent, with core industries such as manufacturing and mining growing slower than earlier thought.

The capital goods industry saw the biggest fall in May with usage growth at 1.8 per cent compared to a robust 6.8 per cent in April. “However, it wasn’t all bad news as capital goods registered expansion for seventh consecutive month. Basic goods and intermediate goods production continues to remain positive,” said Rishi Shah, an Economist with Deloitte.

Even manufacturing slowed considerably, with May growth at 2.2 per cent. This is slower than the provisional figures for April, at 5.1 per cent, and even the revised figures for that month of 4.2 per cent. Manufacturing constitutes more than 75 per cent of the weightage in the overall IIP.

However, manufacturing output has been growing consistently since October 2014, and is seen to be slowly picking up. “Manufacturing sector growth seems to be picking up though it remains sluggish. With capital goods sector registering positive growth it indicates a turnaround in investments in the economy,” said Dr Jyotsna Suri, President, FICCI.

Electricity production saw the biggest gains in May, growing six per cent compared to a contraction of -0.5 per cent in April. Mining and quarrying grew at 2.8 per cent in May, compared to 0.2 per cent in April.

The consumer goods industry contracted -1.6 per cent in May, with consumer durables contracting -3.9 per cent and consumer non-durables contracting -0.1 per cent, as an indication of subdued demand, an issue flagged by Reserve Bank of India Governor Raghuram Rajan earlier in the year. “The (consumer goods) sector has once again entered the negative territory after showing a positive growth last month thereby signalling a decline in purchasing power, particularly in the rural area. We are hopeful that better monsoons than expected would help rural demand and would create an improved environment for revival of the consumer goods sector,” said Chandrajit Banerjee, Director General, CII.





With capital goods sector registering a positive growth, it indicates a turnaround in investments in the economy

Mr. Jyotsna Suri, President, FICCI.





Electricity production saw the biggest gains in May, growing six per cent



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