Growth of industrial production surprisingly accelerated in April. At 4.1 percent the annual rate was up from a stronger revised 2.5 percent mark in March and well above market expectations.
Moreover, manufacturing comfortably outperformed the headline index as output here was up some 5.1 percent versus a year ago. However, amongst the other main categories mining and quarrying saw growth of just 0.6 percent while electricity production was 0.5 percent weaker than in April 2014.
With the newly released May inflation report also showing some renewed, if expected, buoyancy, today's factory goods data should ease some concerns that the Indian economy is falling short of official growth projections. In turn this should boost speculation that RBI policy is on hold for the time being. That said, May's PMI survey was hardly bullish (composite output index 51.2) so for now at least, risks remain on the downside.
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.
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