IN: Industrial Production

Tue Sep 12 07:00:00 CDT 2017

Actual Previous
Change Y/Y 1.2% -0.1%

India's industrial production index advanced 1.2 percent on the year in July, rebounding from a decline of 0.1 percent in June. Output rose on the year in eight of the twenty-three industry groups covered in the survey.

The increase in the headline index was mainly driven by manufacturing output, which rose 0.1 percent on the year in July after falling by 0.4 percent in June. Stronger growth was also recorded in electricity output, up 6.5 percent on the year compared to 2.1 percent in June, and mining output, up 4.8 percent compared to 0.4 percent.

PMI data released earlier in the month suggests industrial production growth may strengthen further in August. The manufacturing survey's headline index rebounded strongly that month, with respondents reporting that activity had recovered from the initial impact of the implementation of the government's new goods and services tax. At its most recent policy meeting, held in early August, officials at the Reserve Bank of India retained their growth forecast for the current fiscal year at 7.3 percent.

Industrial production measures the physical output of the nation's factories, mines and utilities. Data are not seasonally adjusted and the main is on the annual growth rate of total industrial production and, within that, manufacturing output. The report is usually released around six weeks after the end of the reference month.

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.