Factory output rises to 7.1% in December 2017; manufacturing sector grows by 8.4%

Index of Industrial Production (IIP) or factory output for the month of December 2017 came in at 7.1%, compared to 8.4% in November 2017 and 2.2% in the month of October 2017. 
 
Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of November 2017 have been released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation. 
 
The General Index for the month of December 2017 stands at 130.3, which is 7.1% higher as compared to the level in the month of December 2016. 

source: tradingeconomics.com  

Cumulative growth of IIP for the period April-December 2017 over the corresponding period of the previous year stands at 3.7%. 
 
Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of December 2017stand at 115.5, 131.6 and 143.9 respectively, with the corresponding growth rates of 1.2%, 8.4% and 4.4% as compared to December 2016.
 
Cumulative growth in these three sectors during April-December 2017 over the corresponding period of 2016 has been 2.8%, 3.8% and 5.1% respectively.
 
16 out of the 23 industry groups (asper 2-digit NIC-2008) in the manufacturing sector have shown positive growth during the month of December 2017 as compared to the corresponding month of the previous year. 
 
Industry group ‘Manufacture of other transport equipment’ has shown the highest positive growth of 38.3% followed by 33.6% in ‘Manufacture of pharmaceuticals, medicinal chemical and botanical products’ and 29.8% in ‘Manufacture of computer, electronic and optical products’. 
 
Earlier Aditi Nayar, principal economist at ICRA, said, "Manufacturing growth is expected to remain robust in December 2017, benefiting from a favourable base effect, as well as the robust expansion displayed by sectors such as automobiles.”
 
On the other hand, the industry group ‘Manufacture of tobacco products’ has shown the highest negative growth of (-) 28.2% followed by (-) 22.3% in ‘Othermanufacturing’ and (-) 14.9% in ‘Manufacture of electrical equipment’.
 
As per Use-based classification, primary goods growth rates in December 2017 over December 2016 were at 3.7%. While growth rates for Capital goods was at 16.4%, Intermediate goods at 6.2% and Infrastructure/ Construction Goods at 6.7%. 
 
While the Consumer durables and Consumer non-durables have recorded growth of 0.9% and 16.5% respectively.
 
Here's an overview of the dominant item groups (five each) which have positively and negatively contributed to the overall growth of IIP, taking into account their weights. 
 

 
While providing the data for December month, the Central Statistics Offices (CSO) mentioned that, along with the Quick Estimates of IIP for December 2017, the indices for November 2017 have undergone the first revision and those for September 2017 have undergone the final revision in the light of the updated data received from the source agencies.
 
Analysts have already predicted IIP to come lower in comparison with month-on-month performance, where the factory output jumped to 5-year high in November 2017. 
 
Dhananjay Sinha and Kruti Shah, analysts at Emkay Global, said, "We expect IIP growth, particularly from Consumer Durables side, to be reinvigorated to an average 5.5-6.5% in Q4FY18. However, we believe a large amount of improvement in consumer demand is likely to further rely more on imports rather than substantial pick-up in the domestic production."
 
Stewart Mackertich predicted IIP for December 2017 at 6.1% against prior period number of 8.40%.