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.
