IN: Industrial Production

Mon Jan 12 06:00:00 CST 2015

Consensus Actual Previous
Change Y/Y 2.2% 3.8% -4.2%

Industrial production rebounded well November. Following its holiday-depressed negative rate in October, annual output growth jumped fully 8 percentage points to 3.8 percent, its strongest reading since June and significantly above market expectations.

Crucially, the recovery in overall industrial activity was more than matched in the key manufacturing sector where output was up 3.0 percent on the year after a (similarly downwardly biased) 7.6 percent slump at the start of the quarter. Elsewhere, mining and quarrying recorded a 3.4 percent annual rise and electricity expanded 10.0 percent.

Despite November's improvement the goods producing sector remains relatively sluggish. Hence, over April-November total industrial production grew a modest 2.2 percent compared with the same period of 2013. This hardly suggests that the sector will pose any near-term threat to the RBI's inflation goals.

Industrial production index measures changes in the volume of production in the mining, manufacturing and electricity sectors. The data are not seasonally adjusted.

Investors want to keep their finger on the pulse of the economy because it usually dictates how various types of investments will perform. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers more subdued growth that will not lead to inflationary pressures. By tracking economic data such as industrial production, investors will know what the economic backdrop is for these markets and their portfolios.

The index is a quantitative index with the production of the items being expressed in physical terms. The Index is compiled by taking into account the quantities of items produced during the current month, compared with the average monthly production in the base year. Selection of items is based on the total production of the items as the primary (main) product as well as secondary (by) product. Data are available monthly within six weeks of reference month.