IP Growth Declines MoM but Remains Strong YoY

Industrial production (IP) growth declined by 1% MoM sequentially on a seasonally adjusted basis, but remained strong at 10.3%YoY in October: This compares with growth of 9.6%YoY (revised upwards from 9.1% earlier) in September and 11.0%YoY in August 2009. The sequential retracement in IP growth in the month of October was largely in line with expectations on account of seasonal factors like the Diwali festival holidays. However, the growth in October was below market expectations (as per
Bloomberg survey) of 12%YoY.

Growth in the electricity segment decelerated to 4.7%YoY in October, compared with 7.9%YoY registered in the previous month. Growth in the mining and manufacturing segments accelerated to 8.2%YoY and 11.1%YoY, respectively. Growth in consumer and intermediate goods was up, while basic and capital goods growth was moderate.

The overall trend in IP growth should remain strong in the coming months. The early indicators for November are showing an accelerating trend – viz automobile sales.