Industrial output slumps; confirms fears of slowdown

The Index for Industrial Production (IIP) data, which provides an indication of industrial activity has slumped to -0.4% in September, over the corresponding period of last year. Analysts were largely expecting a positive IIP figure for September.

The slump in IIP has largely been on account of a sharp drop in capital goods, which largely saw a growth of -12.2% in September in comparison to the corresponding period of last year.

The three sectors that constitute the IIP index are Mining, Manufacturing and Electricity. The monthly growth rates of these three sectors for the month are 5.5%, (-)1.5% and 3.9% respectively. Apart from capital goods (-12.2%) consumer durables also saw a negative growth of -1.7%, while positive growths have been achieved in basic goods (3.5%), intermediate goods (1.8%) and consumer non-durables (1.1%).

The IIP data has taken analysts by surprise, though now there are hopes that given the strong de-growth the RBI might act to cut interest rates at a faster pace.

GoodReturns.in