Industrial output contracts in August for the first time in nearly two years

Mining output recorded a contraction of 4.3 per cent successful August arsenic against a maturation of 3.8 per cent successful July and 12.3 per cent successful the year-ago period, reflecting the interaction of dense rainfall successful August connected mining activities. Electricity output besides posted a contraction of 3.7 per cent successful August compared with 7.9 per cent successful July and 15.3 per cent successful the year-ago period.

“The slowdown was connected relationship of an unfavourable base. Among the large sectors, mining and energy sectors witnessed a contraction. Heavy rainfall successful the period of August whitethorn person had a bearing connected the mining assemblage slowdown,” Rajani Sinha Chief Economist CareEdge Ratings said.

Manufacturing, which accounts for 77.6 per cent of the value of the IIP, besides slipped to a 22-month debased of 1.0 per cent successful August, chiefly owed to precocious basal effect. Manufacturing output had grown 4.4 per cent successful July and 10.0 per cent maturation successful August 2023.

On the ground of use-base classification, the superior goods conception slipped into the antagonistic territory aft a spread of astir 3.5 years, contracting by 2.6 per cent successful August chiefly owed to basal effect. It had grown 5.9 per cent successful the erstwhile period and 12.4 per cent successful the year-ago period.

Capital goods segment, a cardinal indicator of the concern sentiment, grew 0.7 per cent successful August arsenic against 11.8 per cent maturation successful July and 13.1 per cent successful the year-ago period.

On the depletion goods side, determination was a mixed picture. Consumer durables output — an indicator of depletion request — grew 5.2 per cent successful August arsenic against 8.3 per cent maturation successful the erstwhile period and 6.0 per cent successful the year-ago period. However, user non-durable goods output, which reflects fast-moving user goods, continued to beryllium successful antagonistic territory for the 3rd consecutive period astatine (-) 4.5 per cent successful August arsenic against (-)4.3 per cent successful July and 9.9 per cent maturation successful the year-ago period.

“A sustained diminution successful user non-durables indicates that the accent successful agrarian request hasn’t bottomed retired yet. However, the dependable maturation successful user durables is simply a affirmative for depletion request successful the economy. Consumer durable goods recorded the highest maturation among the use-based segments astatine 5.2% YoY successful August 2024,” Pras Jasrai, Senior Economic Analyst, India Ratings and Research said.

Sectorally, arsenic per the IIP data, 11 retired of the 23 sectors successful manufacturing registered contraction successful August, with different manufacturing (-8.2 per cent), printing and reproduction of recorded media (-7.1 per cent), manufacture of fabricated metallic products, but machinery and instrumentality (-6.5 per cent), manufacture of pharmaceuticals, medicinal chemic and botanical products (-6.1 per cent) were among the important non-performers. Manufacturing of electrical instrumentality (17.7 per cent), wearing apparel (14.0 per cent) and furnishings (13.9 per cent) were among the highest increasing sectors.

However, experts cautioned that the sectors of wearing apparel and furnishings gained chiefly connected basal effect. “Industries similar computers and electronics, readymade garments and furnishings had witnessed crisp declines past twelvemonth and hence were buoyed by this statistical effect. Export marketplace has besides been anemic which is getting reflected successful the pharma segment…the readymade goods conception would person benefited to a constricted grade from exports which got an impetus owed to the problems successful Bangladesh. We whitethorn expect maturation rates to beryllium amended from September onwards with a highest being achieved by October extremity which would beryllium the post-harvest and festival play erstwhile spending typically increases,” Madan Sabnavis, Chief Economist, Bank of Baroda said.