Industrial Production Update - August 2012 - Eastern Financiers

Surprising yet again!!! The IIP growth for the nation implausibly surged above market anticipation of around a percent to 2.66% against prior months negligible provisional growth of 0.1% which has been revised down to -0.2% - despite of slither in the eight core industrial growth that has 37.9% weightage in the IIP index. The eight key industries tripped down to 2.1% in August against 3.8% a year ago, indicating persistent sluggishness in the economy. The cumulative expansion of these industries in April-August 2012 slowed to 2.8% from 5.5% in the same period last year. Moreover, country's annual exports fell for the fifth consecutive month and imports rose in September, pushing the trade deficit to its widest in 11 months in the latest bleak data as the country struggles to balance its finances. Nevertheless, IIP in August last year stood at 3.4%. Cumulative IIP growth over the April-August period of FY13 landed slightly in the positive terrain at 0.4% against beefy 5.6% growth clocked during thesame period of last fiscal.

Except for the capital goods sector, growth was marked across sectors with manufacturing, mining and electricity clocking growth of 2.9%, 2% and 1.9% respectively during the month against prior months de-growth of (0.67)% and (0.48)% in Manufacturing and Mining correspondingly, while Electricity clambered 2.76%. Mining, Manufacturing and Electricity witnessed growth of (5.5)%, 3.9% and 9.5% respectively in August 2011. The capital goods sector endured to be bleak this month marking negative growth of (1.7)%, however the murky growth dripped down from prior months massive negative growth of (5)% and (27)% in July and June respectively. Capital Goods has been the only drag on the IIP Index that has climbed only once since the last nine months, during February that was a blip. The number has been extremely volatile in the preceding months that kept the overall index serrated.

The production growth in the manufacturing sector that has around 75% weightage in the IIP Index was flat during the April-August period of the fiscal 2013 against stout growth of 6% during the same period last fiscal. Output of capital goods contracted in the April-August period by 13.8% as against growth of 7.3% in the 2011-12 period. Mining that has around 14% weightage in the IIP index contracted during the first five months of the fiscal 2013 by 0.6% against de-growth of 0.5% in the April-August period of FY12.

Source : Equity Bulls

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