India IIP Data – Jun’19


India’s industrial output – as measured by Index of Industrial Production (IIP) – eased to 2% in June 2019, as compared to 7% in June 2018 and from an upwardly revised 4.6% in the previous month on the back of sluggish domestic demand, owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome.



Manufacturing output, took a hit in June, rising by only 1.2%, YoY which had risen by 4.5% in May, mostly damaged by contraction in the automobile sector.  Production of electronic goods, rising by 10% in June after the government pushed manufacturing in the sector on a sustained basis over the past one year, through a series of benefits and the phased manufacturing programmes aimed at reducing imports of electronics goods.  Apparels, wood products and basic metals continued to see healthy growth in June while paper, furniture and fabricated metal products were the biggest losers. 8 out of the 23 industry groups in the manufacturing sector have shown positive as compared to the corresponding month of the previous.

Electricity generation rose by 8.2% YoY in Jun’19, up from the 7.4% rise in May’19 owing to higher thermal based generation. Cumulative electricity generation has been strong despite of industrial slowdown.

Mining output slowed down to 1.6% YoY vs. 2.4% in May-19 led by contraction in production of crude oil and natural gas.

Primary goods production grew marginally by 0.5% YoY in Jun’19 as against 2.2% in May’19 on account of higher YoY base.

Capital goods production continued to witness downward trend, showing declined by 6.5% YoY in Jun’19 as against contraction of 1.4% in May’19 on account of a higher base as well as slowdown in capacity addition by major industries.

Infrastructure and construction goods output fell by 1.8% YoY in Jun’19 on account of slowdown in construction activity.

Consumer durable output posted a decline of 5.5% YoY in Jun’19 vs. 0.3% in May’19 on account of lower demand. Consumer goods production had been slowing for some time, reflective of inventories that have built up in the third quarter of 2018-19 when capacity utilization also improved. We expect demand to pick-up momentum in the ensuing festive season.

Consumer non-durables output grew by 7.8% YoY in Jun’19 as compared to 8.1% in May’19. We expect the momentum to continue going ahead with recovery in rural demand.

We expect industrial output to pick-up pace on account of recovery in demand post 1HFY20E on better liquidity management and clarity on global growth concerns. The outlook for domestic consumption, exports and private investments remain tempered, although Central Government spending may gather momentum in the post-Budget months. The recent surge in rains, that has caused flooding in parts of the country, may pose more of a risk than a benefit to the Kharif harvest.


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