Industrial output contracts in March 2019

The Index of Industrial Production (IIP) has contracted by 0.1%. This was against the consensus growth expectation of 1.2%. In the month of February 2019, growth in IIP stood at 0.1% and for the month of March, year ago total growth recorded was 5.3%. Infrastructure goods fared well at 6.4%, despite a high base, while capital goods growth continued its negative trend. Electricity and mining growth was tepid, manufacturing too contracted by -0.4%.

The IIP growth for the month of March has either contracted or has witnessed weak growth across the board. Electricity and mining output stood at 2.2% and 0.8% respectively. The growth in manufacturing was below expectation at -0.4% (vs. -0.4% last month; 5.7% last year). Electronics, non-metallic mineral products (cement), wood & wood products, and food products reported strong growth. Basic metals reported stable growth on an elevated base, while chemicals continued to record tepid growth for the sixth consecutive month. Poor growth was seen in tobacco & tobacco products, beverages, textiles, furniture, transport equipment, metal products, paper and paper products, electrical equipment, rubber & plastic products, motor vehicles and machinery.

Among all these disappointing numbers, there was one positive number and that was the marginal decline in the number of industries that have recorded negative growth. It decreased to 12/23 from 13/23 last month.

The contraction in the IIP remains a serious concern for the economy. Most sectors – consumption as well as investment – have weakened, however, infrastructure remained strong.