IIP growth slips to 4-month low of 2% in June

Factory output growth slipped to 4-month low of 2 per cent in June, lower than the 7 per cent growth recorded in same month last fiscal.

For the April-June 2019 period, the Index of Industrial Production (IIP) grew 3.6 per cent as against 5.1 per cent in the same period last year, official data released on Friday showed. The IIP performance in June was weighed down by poor show in manufacturing and mining.

The previous low in IIP growth was seen in February when it had inched up 0.2 per cent.

Thereafter, IIP grew at 2.7 per cent in March, 4.3 per cent in April and 4.6 per cent in May this year.

Manufacturing sector grew 1.2 per cent in June, much lower than 6.9 percent a year ago. Mining sector growth fell to 1.6 percent in June from 6.5 per cent in same month last year.

Capital goods saw a contraction of 6.5 per cent in June as compared to 9.7 per cent growth in June last year.

The expansion in power generation sector stood at 8.2 per cent as against 8.5 per cent in June last year.

Madan Sabnavis, Chief Economist, CARE Ratings, said that IIP growth at 2 per cent “comes as a kind of surprise as our forecast was 0.7 per cent. Yet it fails to inspire any cheer as it is also a continuation of declining growth rate in the last three months.

“Quite clearly there is concern in most sectors of industry with both consumer durable and capital goods slipping into negative territory”.

Aditi Nayar, Vice-President and Principal Economist, ICRA, said “although the sequential dip in industrial growth is partly on account of the base effect, the anaemic June IIP print as well as the YoY contraction in 15 of the 23 sub-sectors of manufacturing, reinforce the evidence of a slowdown emerging from various sectors”.

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