Industrial Production – Double-digit growth

India’s industrial sector is back and back with a vengeance. The 10.4% year-on-year rise in August was the first double-digit increase in output since October 2007 and compares with a bottom of – 0.2% in December. On a seasonally adjusted basis, our calculations suggest that output rose 2.3% on the month and 5.9% in 3 month-on-3 month terms (25.9% annualised). The latter is India’s strongest increase since at least mid-1994 and can only be termed a powerful V-shaped recovery.

The breakdown of the August release by industry showed mining (12.9%), manufacturing (10.2%) and electricity (10.6%) all registering double-digit growth.Meanwhile, basic and intermediate goods were up 10% and 14.3% respectively, with capital goods production rising 8.3%. The last of these remains below the long-term average of 9.8%. Non-durable consumer goods were the only area to show a slowdown (to 3.7% from 5.8%).