IN: Industrial Production

Tue Dec 12 06:00:00 CST 2017

Consensus Actual Previous Revised
Change Y/Y 3.0% 2.2% 3.8% 4.1%

India's industrial production index rose 2.2 percent on the year in October, down from a revised increase of 4.1 percent in September and falling short of the consensus forecast of 3.0 percent.

The slowdown in headline year-on-year growth was broad-based. Manufacturing output, which accounts for almost 78 percent of the total index, grew by 2.5 percent on the year in October, down from a revised increase of 3.8 percent in September, while the year-on-year increase in mining output, which accounts for around 14 percent of the index, slowed from 7.8 percent to just 0.2 percent. Electricity output, which accounts for around 8 percent of the index, grew by 3.2 percent on the year in October, down from 3.4 percent in September.

The decline in industrial production growth is in line with PMI survey data that also indicated that conditions in the manufacturing sector weakened in October. More recent PMI data released earlier in the month, however, suggests industrial production growth may strengthen in November, with the manufacturing survey's headline index increasing that month to its highest level since October 2016.

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.