The country’s industrial output has registered a 10.4% YoY jump in August marking a 22 month high since the 12.2% of October 2007.
The latest Index of Industrial Production data released by the Central Statistical Organisation reveals that all the three major sectors constituting the index have registered double digit growth rates. While manufacturing grew by 10.2% the corresponding increases for mining and electricity amounted to 12.9% and 10.6%respectively.
Some of this high growth is on account of a lower base: August 2008 saw an overall year on year IIP rise of just 1.7% with these being 1.7% for manufacturing, 2.8% for mining and 0.8% for electricity.
The cumulative annual increase in the general IIP for April to August works out to 5.8% which is higher than the 4.8% during the first five months of 2008-09.
The same pattern holds for manufacturing 5.5% versus 5.1%, mining 8.4% versus 3.5% and electricity 6.6% versus 2.3%. The broad ased character of what appears as a genuine industrial recovery under way is also confirmed by the use based break up of the IIP.
The index for intermediate goods went up by 14.3% in August while the corresponding year on year growth rates stood at 10% for basic goods, 8.3% for capital goods, 22.3%for consumer durables and 3.7% for consumer non durables.
The evidence of recovery becomes clearer if one were to look at the use based IIP data for a slightly longer period. That in turn establishes a certain pattern of how the Indian industry went into a downturn phase and has since seemingly emerged out of it.
The use based sector to have faced the initial heat was intermediate goods which recorded negative growth rates continuously from last August to February. This was followed by basic goods which was in negative territory in January and February. Both intermediate and basic goods go into the production of the final user sectors namely consumer and capital goods.
As the final user sectors saw a contraction happening in the future, they simply cut down their orders from the intermediate and basic goods industries. With working capital too drying up, they preferred it run down inventories rather than procure raw materials in advance.
As a result, intermediate and basic goods were the first to go into recession. Consumer and capital goods experienced negative growth only over March to May by which time a bottoming out of sorts had already happened.
(Sourced from http://www.steelguru.com/news/index/2009/10/15/MTE1OTcz/Macroeconomic_indicators_-_Industrial_growth_hits_22_month_high_in_August.html)
Wednesday, October 14, 2009
Macroeconomic indicators - Industrial growth hits 22 month high in August
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