Economics

Macro-Economic Update February 13, 2020 

Macro-Economic Updates
Feb 13, 2020

Industrial output slumps to -0.30% in Dec’19

Industrial Production: After turning positive in Dec’19 to 1.82%, industrial output decelerated once again to -0.30% Y-o-Y in Dec’19 led by negative growth in manufacturing and electricity sectors. Output had grown by 2.53% in Dec’18. This is the fourth month of FY19-20 when industrial output has turned negative. However, the rate of deceleration is much slower than the previous contractions. Cumulative growth for the period Apr-Dec 2019 slowed to 0.55% as against 4.69% growth over the corresponding period of the previous year.

Manufacturing, Mining and Electricity:

Manufacturing sector which witnessed turnaround in output growth – 2.68% – third highest for FY19-20 – in Dec’19, contracted by 1.18% in Dec’19. It grew at 2.88% during the corresponding month previous year. Out of the 23 manufacturing sub-sectors, 16 sub-sectors recorded a negative output growth primarily led by contraction in output of Computer, electronic and optical products (-24.9% Y-o-Y); Machinery and equipment n.e.c. (-20.3% Y-o-Y) and Printing and reproduction of recorded media (-15.5% Y-o-Y), among others. Cumulative growth for the period Apr-Dec 2019 was at 0.53% compared to 4.71% growth in the period of Apr-Dec 2018.

Mining output was the saving grace as it expanded by 5.42% in Dec’19 compared to a contraction of -0.95% in Dec’18. It grew by 1.81% in the previous month. Cumulative growth for the period Apr-Dec 2019 was mere 0.58% compared to 3.09% in the period Apr-Dec 2018.

Electricity sector output continued to decline, though at a reduced rate, for the fifth consecutive month. It contracted by 0.13% in Dec’19 against -5.02% in Nov’19. Cumulative growth for the period Apr-Dec 2019 moderated to 0.70% compared to 6.41% growth in the period of Apr-Dec 2018.

USE-BASED CATEGORIES

Primary goods: After declining for three months in a row, output growth bounced back to 2.21% in Dec’19 compared to -1.09% in Dec’18. Cumulative growth for Apr-Dec 2019 stood at 0.34% compared to 4.14% growth in Apr-Dec 2018.

Capital goods: Output, which has been contracting since Jan’19, dipped at an accelerated pace in Dec’19 to -18.22% Y-o-Y compared to 4.18% in Dec’18. Cumulative growth for the period Apr-Dec 2019 remained in the negative zone at 12.34% compared to 6.81% growth in the period of Apr-Dec 2018.

Intermediate goods: Among the use-based categories, intermediate goods sector recorded a healthy output expansion of 12.47% in Dec’19, although lower than 16.47% growth recorded in previous month. Cumulative growth for Apr-Dec 2019 stood at 12.14% compared to 0.54% growth in Apr-Dec 2018.

Infrastructure/construction goods: The output growth of infrastructure/construction remained in the negative zone for the fifth month with the contraction of 2.60% in Dec’19, compared to an output growth of 9.03% in Dec’18. Cumulative growth for the period Apr-Dec 2019 stood at a negative 2.63% compared to 8.35% growth in Apr-Dec 2018.

Consumer goods: The output of consumer durables contracted for the seventh month in a row to 6.68% in Dec’19 compared to an expansion of 4.11% in Dec’18. On the other hand, consumer non-durables which had recorded a moderate output expansion of 1.55% in Nov’19, declined to -3.73% in Dec’19. It had posted a healthy growth of 6.52% in Dec’18. Cumulative output growth of consumer durables and consumer non-durables for Apr-Dec 2019 stood at a negative growth of 6.59% and positive growth of 2.81%, respectively, compared to a positive growth of 7.42% and 4.27%, respectively, in the corresponding period of the previous fiscal.

Table 1: Top Growth Contributors at Two-digit Level

Positive Growth (Y-o-Y %) Negative Growth (Y-o-Y %)
Basic metals 14.2% Computer, electronic and optical (24.9%)
products
Wood and products of wood and cork,
except furniture; manufacture of articles 13.2% Machinery and equipment n.e.c. (20.3%)
of straw and plaiting materials
Leather and related products 5.9% Printing and reproduction of (15.5%)
recorded media

Table 2: Growth Trends in Industrial Output (Base Year 2011-12)

Industry group Weight Dec-19 Apr-Dec 2019
General (IIP) 100.00 -0.3 0.5
Mining 14.37 5.4 0.6
Manufacturing 77.63 -1.2 0.5
Electricity 7.99 -0.1 0.7
Use-Based Classification
Primary goods 34.05 2.2 0.3
Capital goods 8.22 -18.2 -12.3
Intermediate goods 17.22 12.5 12.1
Infrastructure/ construction goods 12.34 -2.6 -2.6
Consumer durables 12.84 -6.7 -6.6
Consumer non-durables 15.33 -3.7 2.8
Major Manufacturing Industries (2-digit Classification)
Food products 5.30 -2.7 6.2
Beverages 1.04 -4.4 0.3
Tobacco products 0.80 -7.3 2.6
Textiles 3.29 -1.4 -3.4
Wearing apparel 1.32 -9.9 6.9
Leather and related products 0.50 5.9 -0.4
Wood and products of wood and cork, except furniture;
manufacture of articles of straw and plaiting materials 0.19 13.2 11.9
Paper and paper products 0.87 -8.6 -12.3
Printing and reproduction of recorded media 0.68 -15.5 -6.2
Coke and refined petroleum products 11.77 1.2 -0.4
Chemicals and chemical products 7.87 0.8 4.8
Pharmaceuticals, medicinal chemical and botanical products 4.98 -3.3 2.8
Rubber and plastics products 2.42 -5.2 -6.5
Other non-metallic mineral products 4.09 1.7 -1.3
Basic metals 12.80 14.2 13.3
Fabricated metal products, except machinery and equipment 2.65 -13.7 -13.6
Computer, electronic and optical products 1.57 -24.9 -7.9
Electrical equipment 3.00 -3.4 -1.8
Machinery and equipment n.e.c. 4.77 -20.3 -11.2
Motor vehicles, trailers and semi-trailers 4.86 -12.1 -16.1
Other transport equipment 1.78 3.4 -5.6
Furniture 0.13 -6.6 -8.0
Other manufacturing 0.94 -1.4 -9.6

Source: Ministry of Statistics and Programme Implementation

 

Based on Economic Research Department The Clearing Corporation of India Limited


Key definitions:

Monetary stability means a low, stable and predictable inflation and confidence in the currency.

Financial stability means a sound financial system in which banks and other financial organizations function well and responsibly safeguard their clients’ money.

Categories: Economics

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