Industrial output unexpectedly falls in May

India's industrial output surprisingly declined in May when compared to growth in April, as the Mining and Manufacturing sub-segments saw a sharp deceleration in their respective outputs even as the Electricity sub-segment witnessed a steady expansion over the previous month. The industrial output, as measured by the index of industrial production (IIP), stood at a surprisingly low 11.5% in May as against consensus estimates of 15-16%. Also, the Central Statistical Organisation (CSO) today revised down April's IIP growth reading from 17.6% to 16.5%.



The IIP General Index stood at 312.6 in May versus 313.8 in April. Industrial output in May 2009 stood at a meager 2.1% and the IIP stood at 280.30. Manufacturing output declined to 12.3% in May from 17.9% in April, the data released by the CSO showed. Mining sector output too fell to 8.7% versus 11.7% in the preceding month. Growth in electricity generation also decreased to 6.4% from 6.9% in April.

The cumulative IIP growth for the period April-May 2010-11 stands at 14% as against 1.6% in the corresponding period of the previous year. The cumulative growth in the three sub-sectors have been 10.2%, 15.1% and 6.6%, respectively versus 3.4%, 1.1% and 4.8%, respectively in the corresponding period of 2009-10.

As many as 15 out of the 17 industry groups showed a positive growth during May compared to the corresponding month of the previous year. The industry group ‘Metal Products & Parts’ showed the highest growth of 39.8%, followed by 27.6% in ‘Other Manufacturing Industries’ and 26.9% in ‘Jute and Other Vegetable Fibre Textiles’. On the other hand, the industry group ‘Wood & Wood Products’ showed a negative growth of 5.7% followed by 3% in ‘Beverages, Tobacco and Related Products’.

Growth in Basic Goods output stood at 7.9% in May versus 9.1% in April, while the same in Intermediate Goods segment came in at 10.2% compared to 10.6% in the preceding month. Capital Goods output tumbled to 34.3% in May from 69.9% in April. Growth in Consumer Goods segment declined to 8.2% from 11.9% in April while expansion in Consumer Durables segment too fell to 23.7% from 32.8% in April. Consumer Non-durables segment saw its output growth slip to 2.4% from 4.5% in April.