Factory output growth rebounds

NEW DELHI: In what may be a double boost to the country’s economy, the latest industrial production data showed remarkable recovery while retail inflation eased on an annual basis. Factory output growth measured in terms of Index of Industrial Production (IIP) expanded at a nine-month high of 4.3 per cent in August 2017 thanks to robust performance of mining and power sectors coupled with higher capital goods output, government data released on Thursday showed.

The number is notable compared with that for the preceding month at 0.94 per cent and for August 2016 at 4 per cent. The last time the index showcased such a high growth was in November 2016 at 5.7 per cent.
IIP growth during April-August 2017 was 2.2 per cent, down from 5.9 per cent in the first five months of the previous financial year. The government also revised the July IIP number to 0.94 per cent from 1.2 per cent in the provisional estimates released last month.

However, the output growth in manufacturing sector, which constitutes 77.63 per cent of the index, slowed to 3.1 per cent in August from 5.5 per cent a year ago. The output of the mining and electricity sectors grew at 9.4 per cent and 8.3 per cent compared to August 2016. The growth rates in August 2017 over August 2016 are 7.1 per cent in primary goods, 5.4 per cent in capital goods, (-) 0.2 per cent in intermediate goods and 2.5 per cent in  construction goods. Consumer durables and consumer non-durables sectors recorded growth of 1.6 per cent and 6.9 per cent, respectively.

Ten out of 23 industry groups in the manufacturing sector have shown positive growth during August 2017. Meanwhile, retail inflation eased to 3.28 per cent in September compared to 4.39 per cent in the same month last year. August inflation was also revised downwards to 3.28 per cent from 3.36 per cent. Overall food inflation moderated to 1.25 per cent in September from 1.67 per cent in the previous month.
The rate of price in vegetables softened to 3.92 per cent (from 9.97 per cent in August). On the other hand, the inflation print rose in the fuel and light category to 5.56 per cent. It was 3.66 per cent in August.