Core sectors output continues to shrink in June, rate of contraction reduces

The output of the eight core sectors continued to shrink for a 4th consecutive month in June, as the economy gradually comes out of a nationwide lockdown imposed in end-March due to the coronavirus pandemic. Data released by the Commerce & Industry Ministry earlier today showed that the output of the core sectors shrank by 15% in June’20 – the rate of contraction stood at 22% in May – as compared to a 1.2% growth in corresponding period of 2019. Overall, the core sector output has dropped by 24.6% in the April-June quarter, compared to a 3.4% growth in the same period last year.

For the second consecutive month, Fertilizers was the only core sector that registered positive movement – a growth of 4.2% in June. All the other core sectors remained in the negative zone:

  • Steel : – 33.8%
  • Coal : – 15.5%
  • Natural gas : – 12%
  • Electricity generation : – 11%
  • Refinery products : – 8.9%
  • Cement : – 6.9%
  • Crude oil : – 6%

These 8 core sectors contribute 40.27% in the Index of Industrial Production (IIP). The May IIP had witnessed a 34.7% contraction y-o-y. With economic activities gradually resuming from May and picking up some pace in June, it is expected that an improvement will be observed in June IIP figure.

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