The eight core industries’ output growth further slowed down to hit a 9-month low of 3.3 per cent in August 2022. The latest print was significantly lower than the August 2021 level of 12.2 per cent and also lower than output growth of 4.5 per cent recorded in July 2022.

This is the third straight month when core sector output had sequentially recorded a lower print, experts said. 

For the April-August 2022 period, core industries output grew 9.8 per cent against 19.4 per cent in the corresponding period last year.

Just as in July 2022, six of the eight core industries saw an output growth on a year-on-year basis. Only crude oil and natural gas output recorded a decline during August 2022 on a year-on-year basis. In August 2022, both crude oil and natural gas saw decline in output at 3.3 per cent and 0.9 per cent, respectively, on year-on-year basis.

Coal production rises

For the month under review, coal production rose 7.6 per cent and electricity generation increased 0.9 per cent. Refinery products and fertilisers output grew 7  per cent and 11.9 per cent respectively in August 2022 from a year earlier.

Cement production rose 1.8 per cent, while steel output gained 2.2 per cent for the month under review

Prior period revisions

Meanwhile, the Commerce Ministry on Friday revised upwards the eight core industries output growth for May 2022 to 19.3 per cent from provisional level of 18.1 percent.

Last month the core sector growth for June 2022 was revised upwards to 13.2 per cent from 12.7 per cent earlier.The final growth rate of the index of eight core sectors for April 2022 was revised to 9.5 per cent from its provisional level of 8.4 per cent.

Previously, the Commerce and Industry Ministry revised the final growth rate of core industries for March 2022 to 4.8 per cent from 4.3 per cent earlier. The output for February  2022 was revised upwards to 5.9 per cent from the provisional level of 5.8 per cent.

Previously, the growth output of core industries for January 2022 was revised upwards. The core output for December 2021 was earlier revised upwards to 4.1 per cent.

What experts say?

Aditi Nayar, Chief Economist, ICRA, said, “A normalising base and weak demand for electricity and construction activity during the heavy rains appear to have dampened the core sector growth in August 2022”.

While the record high GST e-way bills were encouraging, the low core sector growth suggests that the IIP May record a mid single digit rise in August 2022, she added.

Madan Sabnavis, Chief Economist, Bank of Baroda, highlighted that core sector has registered progressively a slowdown in growth rate for the third successive month to 3.3 per cent in August. This has been influenced partly by the statistical base effect of 12.2 per cent growth last year, he added.

Return to normalcy in coal production is a positive for the economy which was under stress in April and May following the Ukraine war where there was shortage of coal, Sabnavis said. 

Refinery products have done well due to the higher offtake within the country as well as exports. Economic activity returning to normal has been a driver of this sector, he added. 

“We may expect industrial growth to be around 4-5 per cent for August,” Sabnavis said. 

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