IIP grew 2.4% in January 2013 - AXIS Direct

Index of Industrial Production (IIP) grew 2.4% in January 2013 as compared to 1.0% growth in January 2012 and exceeded market expectations (~1.2%) primarily led by a turnaround in the performance of consumer goods which grew 2.8% in Jan 2013 as compared to a contraction of 3.6% in Dec 2012. The uptrend is encouraging in light of the adverse impact of high inflation and moderation in agricultural and non-agricultural growth on demand for certain segments of consumer goods witnessed during 2012. However, the pickup in growth of some categories of consumer goods in January 2013 may partly reflect inventory restocking.

The slowdown of industrial growth supplemented by a continued contraction of capital goods and consumer durables. Capital goods output contracted by 1.8% in January 2013 as compared to the 2.7% de-growth in January 2012, highlighting the continued weakness of investment activity.

The manufacturing sector expanded by 2.7% in January 2013, higher than the 1.1% expansion in January 2012. Nevertheless, half of the 22 sub-sectors of the manufacturing sector continued to record a contraction in January 2013, although the combined weight of these sub-sectors eased to 20.9% in January 2013 from 24.0% in the previous month.

Basic goods (3.4%) and intermediate goods (2.0%) showed a low growth in January 2013, although this marked a slight improvement relative to the 1.9% growth and 2.5% de-growth, respectively, in January 2012.

Source : Equity Bulls

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