Industrial output grows 3.1% in September

India’s industrial output grew 3.1% in September, rebounding from a contraction in the previous month, helped by a double-digit rise in electricity generation even as manufacturing output growth remained weak at 1.8%.

Mining output rose 4.6% in September after a nearly 4% dip in August, as per quick estimates of the Index of Industrial Production (IIP) released by the Statistics Ministry.

On a sequential basis, September’s output was 1.5% over August 2022 but 0.67% below the July 2022 level. Mining, manufacturing as well as electricity output was below July 2022 levels.

Inflation continues to hit consumers

Inflation continued to hurt consumption demand from households, reflected in the output of consumer durables as well as non-durables contracting sharply again, by 4.5% and 7.1%, respectively.

This is the third successive month of shrinking output for consumer non-durables, though there was a minor 2% rise in output compared to August.

Consumer durables output slipped for the second consecutive month but the production level was 5% over August and the highest since June.

All other categories of goods classified on the basis of their use recorded a year-on-year rise in September, led by capital goods (up 10.3%) and primary goods (up 9.3%). Infrastructure and construction goods grew 7.4% and intermediate goods production was 2% higher than September 2021.

‘Welcome but lacklustre’

ICRA chief economist Aditi Nayar said September’s industrial output growth rebound from August’s 0.7% dip is ‘welcome albeit lacklustre’, and comes amid shrinking demand for consumer goods and weak exports.

“We expect the overall IIP growth to ease to sub-2% in October 2022, as a higher number of holidays in October 2022 relative to October 2021 owing to the earlier onset of the festive season and flagging external demand are likely to have constrained the performance of the manufacturing sector in the month,” she said.