IN: Industrial Production

Fri Apr 10 07:00:00 CDT 2015

Consensus Actual Previous Revised
Change Y/Y 2.4% 5.0% 2.55% 2.8%

Annual growth of goods production picked up surprisingly quickly in February. At 5.0 percent, the mid-quarter rate was almost double January's upwardly revised 2.8 percent, comfortably stronger than expectations and the fastest pace since November.

Moreover, the acceleration in overall output was mirrored in the key manufacturing sector where production was 5.2 percent higher than in February 2014.

Today's data are unlikely to have much impact on RBI policy which remains firmly focussed upon meeting its interim CPI targets ahead of the adoption of a full blown inflation target in FY2016/17. However, the unexpected buoyancy of goods production may yet leave the central bank that much more cautious about the speed with which it delivers any further interest rate cuts in 2015.

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.