Industrial output grew 12.3% in June

The Index of Industrial Production (IIP), however, grew only 0.14% over May 2022 levels

India’s industrial output grew 12.3% in June, moderating from 19.6% this May, led by a 16.4% uptick in electricity and 12.5% growth in manufacturing. Mining activity grew 7.5% in the month.

The Index of Industrial Production (IIP), however, grew only 0.14% over May 2022 levels, with Manufacturing being the only sector to report a sequential uptick in output in June, rising 1.34%.

Production of consumer durables and capital goods led the growth trajectory among use-based categories for the second month in a row, rising 26.1% and 23.8%, respectively, in June.

This is the third successive month of output growth for consumer durables after six months of contraction. By contrast, consumer non-durables output growth crawled for the second month in a row, rising just 2.9% in June after a 0.9% rise in May.

Primary goods output rose 13.7%, followed by intermediate goods (11%) and infrastructure/construction items which grew 8%. However, these three sectors reported a sequential decline from May’s output levels, with primary goods slipping 3.8%, intermediate goods 2.9% and construction goods 2.7%.

ICRA chief economist Aditi Nayar attributed the broad-based drop in the IIP growth rate to effects of a 'normalising base'. Yet, manufacturing growth spurred the numbers higher than the 10.2% estimated by the rating agency.

“Given the moderation in the year-on-year performance recorded by most high frequency indicators in July 2022, such as electricity generation and non-oil exports, we expect the IIP growth to ease to high single digits,” she said.