India’s industrial output grew at the sharpest rate in seven months to 5.9% on year in May on the back of manufacturing and electricity sector performance, data released on Friday showed.
In April the industrial output had grown by 5%. The manufacturing sector that accounts for 77.6% of the index was up 4.6% on year in May.
In April the manufacturing growth was 3.9% but in May of last year the sector had grown at 6.3%.
The growth of 13.7% was recorded in electricity output in May while last year during the same month the output of the sector had grown 0.9%. In April the electricity sector had grown 10.2%.
“Double-digit expansion in electricity output for the second month in a row can be attributed to the increased power demand amid heatwave-like conditions across the country,” Chief Economist at CareEdge Ratings Rajani Sinha said.
The mining output was up 6.6% in May as compared to 6.8% in April and 6.4% in Mar 2023.
Within the index the biggest contributors like basic metals and petroleum grew at 7.8 % and 2 %.
Output of motor vehicles and allied products was up 6.2 % on year in May while other transport equipment output increased 16.8 %. Food product manufacturing that also has a significant weight in the index was down 5.5%
On the basis of use-based classification, the data showed the decline in output of capital goods, intermediate goods, infrastructure goods declined on-year, which points to subdued investment activity during the month. Primary goods production also registered an expansion during the month. In the consumer facing sectors, non-durables declined while the durables output increased.
The post-harvest festival season will hold clues to revival of demand, especially rural, chief economist at Bank of Baroda Madan Sabnavis said.
The performance of the use-based categories was mixed, with three witnessing an acceleration and a similar number seeing a deceleration in growth in May 2024 vis-à-vis the previous month.
“Based on the trends in the available high frequency data for June, IIP growth will ease to 4.0-5.0 % in that month from the healthier-than-expected in May 2024,” chief economist at ICRA Aditi Nayar said.