IN: Industrial Production

Thu Mar 12 07:00:00 CDT 2015

Consensus Actual Previous Revised
Change Y/Y 0.65% 2.55% 1.7% 3.23%

The goods producing sector outperformed expectations in January. Moreover, annual growth of 2.55 percent followed a significantly stronger revised 3.23 percent reading in December.

The key manufacturing subsector posted a 3.3 percent yearly rate and electricity 2.7 percent. However, mining and quarrying (minus 2.8 percent) subtracted from headline growth.

Despite January's surprisingly firm outturn, growth of industrial production remains relatively sluggish. Indeed, over the fiscal year so far, output is up just 2.5 percent. To this end, last month's national budget aimed to boost infrastructural spending but the proposed measures will need first to get the nod in parliament which is far from a done deal. At any rate the RBI does not seem convinced by the recovery to date and today's report is unlikely to delay further monetary easing for long.

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.