Index Industrial Production (IIP) June 2012 Highlights by Angel Broking
􀂄 As per the Quick Estimates on the Index of Industrial Production (IIP), industrial growth declined by 1.8 per cent in the month of June 2012 as compared to 9.5 per cent growth in June 2011.
􀂄 Cumulative growth for the period Apri l- June 2012-13 stood at -0.1 per cent as compared to the corresponding period in 2011-12.
􀂄 Negative growth in Manufacturing and Capital goods leads to contraction in overall IIP growth.
Performance on Sectoral basis:
On a year-on-year basis, Mining recorded a marginal 0.6 per cent growth rate after witnessing negative performance since the past 3 months. Electricity growth has been robust at 8.8 per cent for the month of June 2012. Manufacturing growth slid into negative territory with a -3.2 per cent growth in June 2012 after having shown a positive growth of 2.6 per cent in the month of May 2012.
Cumulative growth in Mining and Manufacturing for the period April-June 2012-13 has staggered at -1.1 per cent & -0.7 per cent respectively. Electricity sector has performed reasonably well at 6.4 per cent.
In the manufacturing sector, as per the 2-digit level classification in terms of industries, 14 out of the 22 industry groups in the manufacturing sector have shown positive
growth during the month of June 2012 on a year-on-year basis. Radio, TV and Communication Equipment and Apparatus is the front-runner with growth of 16.8 per cent
while Electric Machinery and apparatus has shown the largest negative growth of 56 per cent.
Performance in the Use-based Category: Under the Use-based classification, Basic goods and Intermediate goods recorded a modest growth of 4.1 per cent and 1.6 per cent respectively during the month of June 2012 as compared to June 2011. However, growth in Capital goods has sharply contracted and it stands at a record-low of - 27.9 per cent. Growth in the Capital goods sector has been struggling since July 2011, for a large part of the previous year, indicated by the negative growth in IIP for Capital goods with no signs of recovery.
Growth in the overall Consumer goods sector stands at 3.5 per cent in the month of June as compared the corresponding period in the previous year. Consumer durables witnessed growth of 9.1 per cent while growth in Consumer non-durables declined by 1 per cent during the month.
Revision in IIP growth:
The IIP figures for May 2012 and March 2012 have been revised. The first revision in growth of IIP for May stands at 2.5 per cent over 2.4 per cent recorded earlier last month and the final revision of IIP data for March 2012 stands at -2.8 per cent from -3.2 per cent on a year-on-year basis.
Eight Core Industries:
On a year-on-year basis, the Eight Core Industries which have a combined weight of 37.9 per cent in the IIP grew at 3.6 per cent in June 2012 as
compared to 4 per cent in May 2012. Coal, Petroleum Refinery Products, Cement and Electricity recorded positive growth rates while Steel, Fertilizers, Natural Gas and
Crude oil witnessed a decline in growth for the month of June.
Manufacturing PMI:
India’s Purchasing Managers’ Index (PMI) fell from its level of 55 in the month of June 2012 to 52.9 for the month of July 2012; indicating
slowdown in manufacturing activity.
Policy guidance:
We believe that the Reserve Bank of India (RBI) is unlikely to ease monetary policy by cutting its policy rates since inflation continues to remain at elevated levels with
persistent upside risks. Factors such as high food inflation, increase in MSP prices, supply-side bottlenecks in agriculture, deficient monsoons and the impending hike
in diesel prices pose a significant risk by threatening to aggravate inflationary pressures in the economy.
In the backdrop of slowdown in GDP and faltering industrial production, policy reform measures by the government would be a key catalyst to revive investor
sentiments in the economy.
Report by Angel Broking
Mr. Bhupali Gursale, 022 - 3935 7800 Ext: 6820
bhupali.gursale@angelbroking.com
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