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Industrial output jumps 7% in June to 5-month high; manufacturing up 6.9%

Friday,   10-Aug-2018   05:37 PM (IST)

The country’s industrial output jumped seven per cent in June to a five-month high, due to a boost in manufacturing growth as well as an uptick in capital goods production.In June, the Index of Industrial Production (IIP) grew at almost double the pace of May when it had risen 3.92 per cent. This can be attributed mainly to the manufacturing segment constituting the bulk of the index at 77.6 per cent growing by 6.9 per cent, up from only 2.8 per cent in May.Among the 23 sub-sectors within manufacturing, only four recorded a year-on-year contraction, down from 10 in May. Industries such as electronics, auto, pharma, food, metals, non-metallic products etc, continued to do well. Economists said that higher growth rates within manufacturing resulted due to favourable base effect of negative growth in 2017 for manufacturing and the overall industry. “While the progress is very good, it needs to be seen if this can be sustained, as this growth in June comes on top of major destocking and production cuts undertaken last year due to GST. If these rates are sustained over the next 2-3 quarters, we can hope to get to the 5-6 per cent mark for the year, which will be a significant recovery. We can expect a slack in consumption during July and August, which should bounce back subsequently once the festival season begins from late august,” said Madan Sabnavis, chief economist at CARE Ratings.On the other hand, mining output rose 6.6 per cent in June, in line with expectations. Subsequently, growth in electricity generation was at 8.5 per cent, more than double the 4.2 per cent in May. The sensitive capital goods segment, which connotes investments, saw output rise 9.6 per cent. This was a departure from the declining pace of growth in capital goods production.In May, the sector had seen a 7.56 per cent rise, down from the 11.9 per cent in April.Similarly, growth in the infrastructure/construction goods segment also picked up in June at 8.5 per cent, much ahead of the 4.9 per cent seen in the previous month when cement and steel production had taken a dip.