August industrial manufacturing shrinks 0.8%, inflation drags

India’s industrial output contracted 0.8% in August from the minor 2.2% development recorded within the earlier month, with each manufacturing and mining sectors reporting decrease output than a 12 months earlier, whereas total manufacturing unit manufacturing shrank 2.3% from July 2022.

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While the Index of Industrial Production (IIP) had risen 13% in August 2021, base results solely performed a marginal position within the contraction with the index studying 131.3, the bottom stage since November 2021, when it was at 128.

Manufacturing output contracted 0.7% from August 2021 ranges and was 1.48% decrease than July 2022, whereas the mining sector dropped 3.9% from a 12 months earlier and was 0.95% under July ranges.

Electricity technology was the one sector to clock an uptick with a 1.4% rise this August from a 12 months earlier, and a 1.3% development over July. However, August’s electrical energy output index is the second lowest since no less than April 2022.

While there was ‘all round disappointment’ within the IIP print, Bank of Baroda chief economist Madan Sabnavis stated that the ‘main drag has come from the consumer end with both durables and non-durables production declining by 2.5% and 9.9%, respectively’.

“Inflation has come in the way of demand for sure and the critical part will be how demand turns out in the festival time… unless IIP growth touches 5% in September and October, there will be an adverse impact on growth prospects,” he reckoned.

While industrial output was 4% over pre-COVID ranges in August, it was decrease than most expectations.

“It will be critical for the consumption in the economy to pick up for the overall growth to be sustained. Global growth slowdown, slowing exports and elevated inflation are the other dampeners for pickup in industrial activity,” stated CARE Ratings chief economist Rajani Sinha.