India’s manufacturing sector is limping back to normal post Covid. Only 11 out of 23 manufacturing sectors have registered positive growth on a year-on-year basis up to October 2021, data from a report released by Mumbai brokerage house Nirmal Bang shows. In September, 13 sectors had registered positive growth.

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The pharmaceuticals and chemical products, which had done well during the pandemic time, are now slowing down although they remain above pre-Covid levels, the report says. However, 15 of the 23 manufacturing sectors are above pre-pandemic level, which is encouraging. Sectors that are below pre-pandemic levels include refined petroleum products, textile apparel, paper products, beverages, printing, wood products, leather products and furniture.

Highlights of October Index of Industrial Production (IIP)

IIP is growth flattening out but above pre-pandemic level. IIP growth for Oct’21 came in at 3.2% y-o-y, marginally below Bloomberg consensus estimate of 3.5% y-o-y (our estimate: 4% y-o-y). It was flat vs 3.3% y-o-y growth registered in Sept’21.

Mining output was up by 11.4% YoY in Oct’21 while manufacturing output was up by 2% y-o-y and electricity output was up by 3.1% y-o-y.

According to the goods-based classification, Capital Goods output was down by 1.1% YoY while Consumer Durables output was down by 6.1% y-o-y, mainly on account of lower automobile production.

IIP is 7.8% above Oct’19 level and is up 3.8% on a two-year CAGR basis, but the recovery seems to be flattening out.

On a sequential basis, boosted by the festive season, most sectors registered improvement (except Electricity, Capital Goods and Consumer Durables output).

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