Industrial output growth slows to 2.1% in June

Industrial output grew by 2.1 per cent in June, although down from 4.2 per cent a year ago, on account of poor show by manufacturing and heavy contraction in capital goods production.

On cumulative basis, the factory output in the April-June quarter grew by 0.6 per cent compared to 3.3 per cent growth in the year-ago period.

The June growth was however higher than 1.1 per cent (revised from 1.2 per cent provisionally) in May.Factory output, measured in terms of the Index of Industrial Production (IIP), showed that the manufacturing sector that constitutes over 75 per cent of the index saw a meager growth of 0.9 per cent in June compared to 5.2 per cent a year ago.

For the April-June quarter, this sector’s output showed contraction by 0.7 per cent, as against a growth of 3.7 per cent a year ago.
The capital goods output registered a steep decline of 16.5 per cent in June over a contraction of 2 per cent in last year. In April-June, the production of these goods, which are considered as barometer for investment, declined by 18 per cent compared to a growth of 2 per cent in year ago period.

Growth in output of consumer durables decelerated to 5.6 per cent in June compared to 16.1 per cent a year ago. The consumer non-durable goods also recorded low growth of 1 per cent in June compared to 2.3 per cent a year ago.Overall, consumer goods production recorded a growth 2.8 per cent in June compared to 7.2 per cent a year ago.

However, the power generation recorded an impressive growth of 8.3 per cent in June compared to 1.2 per cent in the same month a year ago. The mining sector recorded a growth of 4.7 per cent in June year as against a contraction of 0.4 per cent a year ago.
In terms of industries, 18 out of 22 industry groups in the manufacturing sector have shown positive growth during the month of June.

As per Use-based classification, the growth rates in June 2016 over June 2015 are 5.9 per cent in Basic goods, (-)16.5 per cent in Capital goods and 6.1 per cent in Intermediate goods.