India's IIP Growth Witnessed An Expected Uptick To 5.2% In January: ICRA
Early data suggests growth may dip in February 2023.
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ICRA Research Report
The YoY growth in the Index of Industrial Production improved to a moderate 5.2% in January 2023 (our expectation: up 5.6%) from 4.7% in December 2022. This was driven by a healthy performance of primary, capital, and infrastructure goods as well as consumer non-durables, which offset the marginal rise in intermediate goods and discouraging contraction in consumer durables.
A portion of the continuing, albeit narrower YoY decline in consumer durables stems from weak exports of such goods. Encouragingly, the IIP growth of 5.2% for January 2023 recorded an uptick both in sequential terms (up 4.7% in Dec 2022), as well as compared to the tepid average of 2.6% for Q3 FY23 and stood at the second highest level since July 2022.
Despite the subdued base related to the third wave of Covid-19, most of the available high frequency indicators recorded a weaker YoY performance in February 2023, relative to January 2023, such as Coal India Ltd.'s output, rail freight traffic, ports cargo traffic, fuel consumption, electricity generation and auto output.
In contrast, vehicle registrations and finished steel consumption witnessed an improved YoY performance in February 2023, relative to the previous month. Based on these trends, we expect the IIP to record a dip in the YoY growth to 3-5% in February 2023.
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