India’s industrial output expanded at 5.2%, the highest pace in six months, in November, on the back of a sharp uptick in the manufacturing, according to the data released by the government on Friday.
The manufacturing sector grew 5.8% in November aided by a low base (1.3%) when the growth was just 1.3%. In October the sector, which carries the weight of 77.6% in the Index of Industrial Production (IIP), had grown 4.4%.
The IIP indicators are in variance with the reading of Purchasing Managers Index (PMI) reading for November where a small dip in manufacturing was recorded as compared to October.
The mining sector expanded 1.9% on year in November, up from 0,9% in October but significantly lower than 7.0% in the same month of 2023. The electricity output was up 4.4%, up from 2.0% in October and 5.8% in November of 2023.
For April-November the industrial output grew 4.1% on year as compared to 6.5% in the year ago period. The manufacturing sector during the period was up 3.3% and electricity 5.3%. “Cumulative growth has been 4.1% and if this tempo is maintained, growth can end at between 5-5.5% for the year,’ Bank of Baroda chief economist Madan Sabnavis said in a note.
Within manufacturing electrical equipment recorded a growth of 37.2% in November, which was the highest for any major product group. The manufacture of computers and electronics was up 18.7%. Motor vehicles were up 5.2% and other transport equipment was 10.3%. Textiles and apparel were other growth drivers with expansion of 3.8% and 7.9%.
Basic metals manufacture was up 7.6%, non-metallic mineral products was up 12% and fabricated metal products was up 19.6%. November being in the middle of the festive season in 2024 recorded 13.1% growth in consumer durables. Consumer non-durables, however, disappointed with a growth of mere 0.6%. For April-November the consumer durables have expanded by 8.7% and non-durables have contracted 0.5%.
The month also saw a big uptick in the infrastructure output which expanded by 10% after a lackluster seven months of the financial year. Similar trends were visible in the capital goods sector with expansion of 9% recorded in November while for April-November the growth has just been 4.4%. “These trends show a pick up in investment and construction activity,” economist at India Ratings Paras Jasrai said. Growth in primary products was 2.7% and intermediate goods was 5.0% in November.
“Going forward, a high base effect would weigh on the industrial sector growth in the near term. The high frequency indicators so far appear to be a mixed bag. While the electricity demand further refined to a six-month high of 5.3%, petroleum consumption and crude steel production remained subdued at around 2% in December. All in all, India-Ratings expects the IIP growth to be around 3% in December 2024,” he added.