India's Industrial Output Grows 5.7% In July

The Index of Industrial Production expanded at a faster pace in July than a month ago.

The IIP grew 5.7% in July, as compared with a revised estimate of 3.8% in June, according to data published by the Ministry of Statistics and Programme Implementation on Tuesday.

Thirty economists polled by Bloomberg had forecast July IIP growth at 5.3%.

On a month-on-month basis, the index declined by 1%.

The IIP print for July exceeded expectations on account of a better-than-expected performance of the manufacturing sector, said Aditi Nayar, chief economist at ICRA.

The annual performance of most available high frequency indicators improved in August relative to July, including freight and electricity generation, she said. Based on these trends as well as a favourable base, ICRA expects the IIP growth to witness an uptick to about 5-7% in August on an annual basis.

Festive season is likely to provide a fillip to consumption demand in the near-term, said Rajani Sinha, chief economist at CareEdge. Over a longer period of time, unfolding of the domestic demand scenario remains critical for industrial activity, she said. The elevated food inflation and monsoon-related vagaries could pose a risk for consumption demand, she said.

Sectoral Estimates (YoY)

• Mining output grew 10.7% in July.

• Manufacturing output expanded 4.6%.

• Electricity generation rose 8%.

Industrial output, as classified by the end use of goods, showed:

• Primary goods output rose 7.6%.

• Capital goods output grew 4.6%.

• Intermediate goods output rose 1.9%.

• Infrastructure and construction goods output rose 11.4%.

• Consumer durables output fell 2.7%.

• Consumer non-durables output grew 7.4%.