Factory output up at 5.2% in January 2023 | Latest News India - Hindustan Times
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Factory output up at 5.2% in January 2023

Mar 11, 2023 12:12 AM IST

For the first 10 months of the fiscal year 2022-23, IIP growth was 5.4%, down from 13.7% in the corresponding period of the previous year. To be sure, the 2021-22 IIP had a strong base effect because of the lockdown in 2020.

The Index of Industrial Production (IIP) grew by 5.2% on an annual basis in January 2023, which is an improvement from the 4.7% annual growth in December 2022, according to data released by the National Statistical Office (NSO) on March 10. This is in line with the previously released data on eight core sectors that showed a 7.8% growth in January 2023 from 7% in December 2022.

IIP tracks activity in manufacturing, mining, and electricity generation, although the first has a share of over three fourth of the index
IIP tracks activity in manufacturing, mining, and electricity generation, although the first has a share of over three fourth of the index

For the first 10 months of the fiscal year 2022-23, IIP growth was 5.4%, down from 13.7% in the corresponding period of the previous year. To be sure, the 2021-22 IIP had a strong base effect because of the lockdown in 2020.

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IIP tracks activity in manufacturing, mining, and electricity generation, although the first has a share of over three fourth of the index. A sector-wise disaggregation of the index shows that the latest improvement in industrial activity was driven by an uptick in manufacturing activity, which grew at 3.7% in January 2023 compared to 3.1% in December 2022. While electricity output sustained the double-digit growth in January 2023, mining output (14.3% IIP share) slowed to 8.8% in January 2023 from 10.1% in December 2022.

“Still, we think this strength in manufacturing could be one-off (due to low base and in expectation of a pick-up in Chinese demand), and sustainability will be key to gauge if the sector is performing better than expected in Q1 having contracted in Q4”, Rahul Bajoria, MD and Head of EM Asia (ex-China) Economics, Barclays, said.

A use-based classification of the index shows that capital spending is a key driver of the economy while consumer demand continues to be weak. Growth in the capital goods sub-category increased from 7.8% in December 2022 to 11% in January 2023. The consumer durables category, on the other hand, contracted by 7.5% in January 2023, making it the second consecutive monthly contraction and the fifth in past six months.

“Consumer durables continued to plunge, by 7.5% y/y, extending the 11.0% fall in December and only partly due to the low base. On the other hand, growth in capital goods, and infrastructure and construction activity remain robust, signaling the resilience of infrastructure. Primary goods production increased by 9.6% y/y up from +8.4% in December”, Bajoria added.

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  • ABOUT THE AUTHOR
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    Pavitra Kanagaraj is a data journalist. She uses public and private datasets to cover economy, women, and politics. Prior to HT, she did macroeconomic research at UNESCAP and ERF. She co-founded the Rethinking Economics chapter at JNU in 2021.

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