Factory output declines to seven-month low of 3.2% in May

13 Jul 2018 Evaluate

With sluggish performance of manufacturing and power sectors coupled with poor offtake of fast moving consumer goods (FMCG), India’s industrial production measured by Index of Industrial Production (IIP) declined to a seven-month low of 3.2% in the month of May 2018, as compared to a revised 4.8% growth in April, though it is higher than 2.9% in May last year. The previous low of industrial production growth was 1.8% in October 2017. Besides, the factory output growth was revised down to 4.8% in April from previous estimates of 4.9%.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of May 2018, stood at 128.8, which is 3.2% higher as compared to the level in the month of May 2017. The cumulative growth for the period April-May 2018 over the corresponding period of the previous year stood at 4.0%.

On the sectoral basis, the manufacturing sector, which constitutes 77.63% of the index, grew by just 2.8% in May 2018, marginally up from 2.6% in the corresponding period last year. The mining sector output recorded an impressive growth of 5.7% in May as against 0.3% in May last year. However, electricity sector growth decelerated sharply to 4.2% during the month as compared to a high of 8.3% year ago. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of May 2018 stand at 107.5, 129.1 and 164.7 respectively. The cumulative growth in these three sectors during April-May 2018 over the corresponding period of 2017 has been 4.9%, 4.0% and 3.1% respectively.

The data also showed that the consumer non-durables sector was the worst performer among the user based goods segment, as its output declined by 2.6% as against a growth of 9.7% year ago. As per Use-based classification, the growth rates in May 2018 over May 2017 are 5.7% in primary goods, 7.6% in capital goods, 0.9% in intermediate goods and 4.9% in infrastructure/construction goods. The consumer durables has recorded growth of 4.3% in the month under review.

In terms of industries, 13 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of May 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of computer, electronic and optical products’ has shown the highest positive growth of 27.0% followed by 21.1% in ‘Manufacture of motor vehicles, trailers and semi-trailers’ and 13.2% in ‘Manufacture of furniture’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest negative growth of (-) 31.9% followed by (-) 15.6% in ‘Manufacture of tobacco products’ and (-) 12.8% in ‘Manufacture of wearing apparel’.

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