IIP Shocker: Factory Output Contracts 0.8% In April
Manufacturing output contracted 3.1 per cent in April Electricity output remained strong, rose 14.6 per cent IIP figure for March was revised upward to 0.3 per cent
Factory output growth unexpectedly shrunk 0.8 per cent year on year in April - its first contraction in three months - data released by the Central Statistics Office (CSO) showed today.
Among the different sectors, manufacturing output contracted 3.1 per cent in April while production of capital goods shrank a whopping 24.9 per cent. Overall, 9 of the 22 industry groups in manufacturing sector showed negative growth in April 2016 as compared to year ago period.
Consumer goods output dipped by 1.2 per cent in April as against a growth of 2.8 per cent year ago; while the consumer non-durable segment showed decline in output by 9.7 per cent compared to a growth of 3.7 per cent year ago.
Electricity output however remained strong, rising 14.6 per cent year on year.
The disappointing factory output data comes as a blow for the economy which grew at faster-than-expected 7.9 per cent clip in the March quarter, outpacing the 7.2 per cent growth in the December quarter.
IIP is an important measure of the economic performance given that it reflects consumer and investment demand. Disappointing data may up the expectation for a rate cut by the Reserve Bank of India in August.
The April factory output growth, measured in terms of the index of industrial production (IIP), was much below the markets' expectation. Economists in an NDTV poll had estimated April factory output growth at 0.7 per cent.
IIP figure for March was revised upward to 0.3 per cent from the earlier estimate of 0.1 per cent.