India’s industrial output picked up some pace in May to grow at a three-month high rate of 5.2% compared to 4.46% in April, with electricity generation growing 0.9% after two months of contraction.
Mining and manufacturing edged up at a swifter rate of 6.4% and 5.7%, respectively, in May, as per data from the National Statistical Office. Within manufacturing, consumer durables turned an ebbing tide for the first time in six months, with output growing 1.1% in May, compared to a 2.5% contraction in April.
Infrastructure and construction goods’ output continued to drive up the Index of Industrial Production (IIP), rising 14% in May after a nearly 13% rise in April. Capital goods’ production also accelerated to grow 8.2% in May from 6.2% in the previous month.
Production of primary and intermediate goods remained tepid in contrast, growing just 3.5% and 1.6%, respectively, though this was higher than April levels. Consumer non-durables’ growth slowed down from over 10% in April to 7.6% in May.
Of the 23 manufacturing sectors tracked by the National Statistical Office, 12 sectors recorded a contraction in output in May, with apparel makers (-21%) and furniture producers (-20.5%) reporting the sharpest declines, followed by wood products (-12.7%), paper products (-8.6%) and computers and electronics (-5.7%).
This was counter-weighed by a sharp 20.9% uptick in pharma output and a 13.4% surge in motor vehicles’ production. Other transport equipment grew 10.9%, while non-metallic mineral products and machinery and equipment makers also upped output by over 10%.
“On the whole, it is a mixed bag, with infra-oriented sectors doing better but we still need to see consumer spending increasing,” remarked Bank of Baroda chief economist Madan Sabnavis. While the auto sector has done well thanks to post-harvest demand from rural India and the marriage season, Mr. Sabnavis said it needs to be seen if this is sustained.
ICRA chief economist Aditi Nayar said the IIP growth may moderate to about 3%-4% in June based on high-frequency indicators such as GST e-way bills, rail freight traffic and petroleum sales which have declined from May levels.
