Index of Industrial Production (IIP) number for August has been released. Industrial output growth in August has come in at 5.6% as compared to 10.6% in the year-ago period.
So growth in August has scaled down when compared to July's growth of 13.6% on a month-on-month basis. The infrastructure numbers which represents around 27% of the IIP numbers is released in advance. It has achieved a poor growth of only 3.7% in August.
Disappointments:
• Aug manufacturing sector growth 5.9% vs 10.6% year ago.
• Aug electricity sector growth 1.0% vs 10.6% year ago.
• Aug basic goods growth 3.7% vs 7.7% year ago.
• Aug capital goods growth (-)2.6% vs 9.2% year ago.
• Aug consumer non-durables growth (-)1.2% vs 6.1% yr ago.
Positives:
• Aug consumer goods growth 6.9% vs 10.9% year ago.
• Aug consumer durable goods growth 26.5% vs 24.7% yr ago.
• Aug mining sector growth 7.0% vs 11.0% year ago.
• Aug intermediate goods growth 10.0% vs 14.4% year ago.
• Jul industrial growth revised to 15.2% vs 13.8% prov.
Key Takeaways:
• Industrial growth should be seen quarterly, not monthly
• Growth will be a modest 10%; not mediocre, not mercurial
• RBI will look at inflation; may hike once more
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