IIP growth slows to 5.8% in September as demand drops

NEW DELHI: Industrial output growth slowed in September after posting a 14-month high growth in the previous month as the manufacturing sector, consumer durables and non -durables remained sluggish, pointing to some slowdown in demand.

Data released by the National Statistical Office (NSO) on Friday showed the index of industrial production (IIP) rose 5.8% in September, slower than the previous month’s 10.3%.Between April and September,IIP growth was at 6% compared with 7.1% expansion in the year-ago period.
The manufacturing sector rose 4.5% in September compared with a 2% expansion in the year-ago month. The capital goods sector, which is a key gauge of industrial activity, slowed to 7.4% in September compared with 11.4% growth in September last year. The consumer durables sector grew 1% compared with a contraction of 5.5% last year, while the consumer non-durables rose 2.7% compared with a decline of 5.7%.
The industrial sector has recovered after a crushing blow due to the Covid-19 pandemic. The global slowdown has had an impact on demand, while a shift in the festive season dates and monsoon rains also added to the moderation in demand.
“IIP growth unexpectedly slowed to 5.8% in September, moderating from last month’s 14-month high growth. The concerning aspect is the sharp sequential deceleration in the manufacturing and electricity sectors. Within manufacturing, export-intensive items, such as, wearing apparel and leather products showed weakness. Moreover, persistent weakness was seen in the output of computer and electronic products and chemicals. Within the use-based classification, the production of consumer goods decelerated sharply, with modest growth seen in the consumer durables component,” said Rajani Sinha, chief economist at ratings agency CareEdge.