Index of Industrial Production grows to 1.2% in July

Index of Industrial Production (IIP) or factory output for the month of July 2017 stood at 1.2% compared to negative 0.1% in June 2017 and 5.2% in the similar month of the previous year.

During previous month, factory output witnessed the first instance of a decline in four years.

source: tradingeconomics.com

The general Index for the month of July 2017 stands at 118.2, which is 1.2% as compared to the level in the month of July 2016. The cumulative growth for the period April-July 2017 over the corresponding period of the previous year stands at 1.7%.

Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of July 2017 stand at 92.6, 119.5 and 151.8 respectively, with the corresponding growth rates of 4.8%, 0.1% and 6.5% in comparision with a year ago same period. Cumulative growth during April-July 2017 over the corresponding period of 2016 has been 2.1%, 1.3% and 5.6% respectively.

As per Use-based classification, growth rates in July 2017 over July 2016 are 2.3% in Primary goods, negative 1% in Capital goods, (-) 1.8% in Intermediate goods and 3.7% in Infrastructure/ Construction Goods.  The Consumer durables and Consumer non-durables have recorded growth of (-) 1.3% and 3.4% respectively.

Along with the quick estimates of IIP for the month of July 2017, the indices for June 2017 have undergone the first revision and those for April 2017 have undergone the final revision in the light of the updated data received from the source agencies.

IIP has risen by just 2% YoY in 1QFY18 – the slowest pace in eight quarters.

Nikhil Gupta and Rahul Agarwal, analysts at Motilal Oswal expected IIP growth to recover to 2.2% in July 2017 after the poor show in June. Our full-year FY18 growth estimate is ~3.5% as against 4.6% in FY17. The FY17 number has been revised downward from over 5% earlier.

On the other hand Nirmal Bang estimated IIP to be at  0.7% YoY for July 2017, up from -0.1% YoY in the previous month as it sees the sluggishness in industry on account of implementation of GST to continue in 2QFY18.