Business

Factory output growth slows to 4.3% in December


NEW DELHI: Industrial output growth slowed in December from the previous month but remained robust as the manufacturing, mining and electricity sectors continued to be resilient, but a possible global slowdown could hurt expansion in the months ahead.
Data released by the National Statistical Office (NSO) on Friday showed the Index of Industrial Production (IIP) rose an annual 4.3% in December, slower than the upwardly revised 7.3% in November but above the 1% in December 2021-22.
The manufacturing sector, which accounts for a bulk of the index, rose 2.6% in December, higher than the 0.6% last year but experts said some signs of weakness were visible. The electricity sector grew by 10.4% during the month compared to 2.8% expansion in the same month year earlier. The mining sector rose by 9.8% compared with 2.6% in December 2021-22.

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The capital goods sector, a key gauge of industrial activity, rose 7.6% in December compared to a contraction of 3% in December 2021-22. The infrastructure/construction goods sector rose a robust 8.2% during the month compared with a growth of 2% in the same month year earlier. Consumer durables segment contracted by 10.4% compared with a decline of 1.9% in December 2021-22. The consumer non-durables sector, which consists of items such as toothpaste, detergent, food and others, grew a robust 7.2% in December compared with an expansion of 0.3% in the same month a year earlier.
“On a 3-month rolling basis, IP remains relatively weak, in contrast to most high-frequency indicators, which remain generally resilient, despite global headwinds. This outperformance is also visible in PMI indicators, and most services sector indicators continue to hit new highs, especially in level terms. While we remain comfortable with our forecast for GDP growth of 7% for FY22-23, we expect a soft landing in activity next year, with our GDP forecast for FY23-24 falling to 6%,” Barclays said in a note.
The Reserve Bank of India has forecast the economy to grow by 6.4% in 2023-24, saying economic activity in India remains resilient. GDP growth in 2022-23 is estimated at 7% and the war in Ukraine and the global slowdown are seen as risks to faster expansion. Domestic demand is seen holding up growth against the backdrop of global headwinds.


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