Industrial production shows recovery in November

Industrial output in the country showed a positive trend in Nov’19 after 3 months of continuous contraction, according to official data released this past Friday. The Index of Industrial Production (IIP), has grown by 1.8% in Nov’19, vis-a-vis corresponding period a year ago. The IIP had contracted by 3.8% in Oct’19. For the cumulative period Apr-Nov’19, industrial output grew by 0.6% compared to 5% growth in the same period last year.

  • Mining output growth stood at 1.7 percent in November against a contraction of 8 percent in October
  • Manufacturing output growth stood at 2.7 percent in November compared to a contraction of 2.1 percent in the preceding month
  • Electricity generation contracted 5 percent compared with a contraction of 12.2 percent in the preceding month

While the IIP showing positive in November is certainly an encouraging trend after 3 months of continuous retraction, yet following factors should be borne in mind:

  • The IIP grew by just 0.2% in Nov’18. Therefore, the Nov’19 IIP benefitted from a favourable base effect. The same effect is unlikely to be there in December
  • While consumer non-durables showed a positive trend (2% growth Vs 1.1% contraction in Oct) , consumer durables segment was again in the red (1.5% de-growth Vs 18% de-growth in Oct), contracting for the 6th month in a row
  • Same is true for capital goods (8.6% de-growth in Nov), primary goods (0.3% de-growth in Nov) and infrastructure & construction components (3.5% de-growth in Nov) which continued to contract. These being critical use based categories, growth in these is vital for reliable positive trend in the industrial sector

Still with 13 of the 23 industry groups showing growth (compared to 5 in Oct), it is an encouraging sign. IPD hopes that the positive trend continues in December.

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