IIP Takes a Hit for 2nd Month in Row, Let Down by Manufacturing and Mining

New Delhi: Remaining in the negative for the second month in a row, industrial production contracted by 0.7 percent in August due to slump in manufacturing, mining and capital goods segments.

The factory output, measured by movement in Index of Industrial Production (IIP), had slipped to an eight-month low of (-)2.49 (revised) in July on account of declining output in manufacturing and capital goods sectors.

The IIP slump in August is lower than July.

On cumulative basis, the factory output in April-August contracted by 0.3 percent, compared to growth of 4.1 percent in the year-ago period.

The official data released today showed the manufacturing sector, which constitutes over 75 percent of the IIP index, contracted by 0.3 percent in August as against 6.6 percent expansion in the same month last year.

The capital goods output registered a steep decline of 22.2 percent in the month, against a growth rate of 21.3 percent in last year.

The data revealed that mining activities shrunk by 5.6 as in August this year as against a growth of 4.5 in August 2015.

Power generation remained almost flat (0.1 percent) in compared to an expansion of 5.6 percent in the year ago period.

Output of consumer durables registered a growth of 2.3 percent while growth in non-durables segment was almost flat.

Overall, consumer goods production recorded a growth 1.1 percent in August compared to 6 percent a year ago.

In terms of industries, seven out of 22 industry groups in the manufacturing sector have shown negative growth during August year-on-year.

Some important items showing high negative growth during the current month include cable, rubber insulated, sugar machinery, woollen carpets, gems and jewellery, and rice.

Some important items that have registered high positive growth include fruit pulp, air conditioner, instant food mixes, ship building and repairs, scooter and mopeds, stainless/alloy steel and boilers.