Manufacturing pulls down factory output, IIP contracts 1.2 percent in February

Industrial output slipped to 4-month low, contracting 1.2 per cent in February, due to decline in the manufacturing sector and lower off take of capital along with consumer goods.The Index of Industrial Production (IIP) had registered a growth of 1.99 per cent in February 2016.

For the 11 month period to February of the last financial year, IIP growth was nearly flat at 0.4 per cent as against 2.6 per cent a year ago. For January, the Central Statistics Office has revised the IIP growth rate to 3.27 per cent from 2.74 per cent in the provisional data released in March.

The previous low was recorded in October when the IIP contracted by 1.87 per cent. Thereafter, it shot up to 5.59 per cent in November.The decline in the IIP in February is mainly on account of 2 per cent contraction in manufacturing sector, which constitutes over 75 per cent of the index.

The sector had recorded a meagre growth of 0.6 per cent in February, 2016. The capital goods output declined by 3.4 per cent in February over a contraction of 9.3 per cent last year.  

Similarly, the overall consumer goods production declined by 5.6 per cent in the month compared to a growth of 0.6 per cent.The non-durable consumer goods output shrank by 8.6 per cent in the month over a contraction of 4.9 per cent year ago.  

In the consumer-durable segment, the output dipped by 0.9 per cent in February against a growth of 10.4 per cent in same month last year. Overall, 15 out of 22 industry groups in the manufacturing sector have shown negative growth in February.