August Industrial Output Growth Soars to 6.4%

In CPI data, core inflation witnessed a pick-up to 4.3% in September from 4.1% in August.

Given that manufacturing rose a robust 6.9% y-o-y in August, compared with 4.6% in the previous month, suggests enhanced capacity utilisation by companies, sustained growth in which is crucial to recovery in the capex cycle.

The electricity sector’s yields accelerated to 5.6 percent last month from a 3.53 percent in July. However, expansion in power generation was much lower than 12.9% in August last year (which incidentally turned out to be the unfavourable base for the calculation of the growth in this segment for August this year). Between April and August, it grew at 1.2 per cent. The output of capital goods, a barometer of investment, grew at an impressive rate of 21.8 per cent as against a contraction of 10 per cent in the same month a year ago.

Consumer price index-based inflation in August stood at 3.74 per cent on cheaper vegetables, fruits and protein-rich items.

“The General Index for the month of August 2015 stands at 176.9, which is 6.4% higher as compared to the level in the month of August 2014”.

Factory production has been growing above 2 per cent since November.

The index fell 0.9% from July on a seasonally-adjusted basis, the Department of Statistics said.

In August 2015, on a seasonally adjusted terms, output for the mining sector declined 10.2 per cent m-o-m. IIP growth increased to 6.4 percent, consistent with indirect tax revenue performance.

“The growth in manufacturing seems to be accelerating and we are hopeful of higher growth in the coming months”. According to the market polls, analysts had expected IIP to be at 5%.Vehicle sales rose for the 11th straight month in September, indicating strong demand that’s waiting to peak during the festive season starting mid-October.The Reserve Bank of India had expected inflation to be around 4.5 percent in September. Economists said they expect industrial growth to sustain momentum as signs of a turnaround were visible.

“On the whole, these estimates put forward certain positive indications of growth revival, however, the policy makers need to continue with the proactive stance to support these developments”, said Rana Kapoor, president, Assocham.