IN: Industrial Production

Tue Apr 12 07:00:00 CDT 2016

Consensus Actual Previous
Change Y/Y 1.0% 2.0% -1.5%

Industrial production had a decent February. Annual growth of output picked up to a higher than expected 2.0 percent, its first reading above zero since last October and also its best performance in four months.

Sixteen of the twenty-two reporting categories posted positive yearly growth. The key manufacturing sector returned a 0.7 percent rate while mining and quarrying posted 5.0 percent and electricity, which dominated the overall gain, a solid 9.6 percent.

For March the manufacturing PMI (52.4) signalled the strongest growth in business activity in eight months so it may be that the sector ended the first quarter on a moderately upbeat note. Still, with March inflation on the soft side of market expectations, there will still be speculation about fresh RBI easing in the second half of 2016.

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.