Industrial Production - March 2013 - Eastern Financiers

Factory Output continued to expand in the last month of FY13 igniting hopes that it is not long before we get to see steady recovery in Industrial activities. The Index of Industrial production (IIP) for the month of March 2013 stood at 192.3, which is 2.5% higher as compared to the level in the month of March 2012. The cumulative growth for the period April-March 2012-13 over the corresponding period of the previous year stood at 1.0%. In March 2012, the IIP had declined by 2.8 per cent and the cumulative growth in the rate of industrial production was 2.9 per cent. In terms of industries, ten out of the twenty two industry groups in the manufacturing sector have shown positive growth during the month of March 2013 as compared to the corresponding month of the previous year.

Core Sector, which comprises of coal, crude oil, natural gas, petroleum refinery products, fertilizers, steel, cement and electricity and accounts for almost 40% of the factory production, grew at slower pace of 2.9 percent as compared to the previous month, when it grew at 3 percent. Earlier, the HSBC manufacturing PMI Survey for March showed that the sector witnessed its slowest rate of expansion in 16 months at 52 as compared to a reading of 54.2 in February, owing to decline in new business orders.

March Industrial Production data showed that Manufacturing Sector grew steadily as compared to last year, when it slipped in the red. The Electricity Sector also showed decent up-tick in growth after showing contraction in the previous month. Mining, however, continued to decline in March-2013-although at a slower pace-when compared to February-2013.

Capital Goods, a key indicator of investment activity in the economy, continued to perform well as the segment registered Year-on-Year growth of close to 7 percent. Capital Goods growth stood at 9.50 percent in February-2013. During the April-March Period, Capital Goods contracted 6.3% as against de-growth of 4% in the same period, last year.

Consumer Goods production during the month under review grew 1.6% as compared to 1.2% witnessed during March-2012. For FY13, Consumer Goods production grew 2.4% as compared to 4.4% growth, last year.

Manufacturing, that has a weightage of almost 75% in the Industrial production surged 3.17% in March as compared to 2.19% in February-2013. Mining shrank by 2.87% as compared to degrowth of 8.15%, last month. Electricity registered growth of 3.53% in March after shrinking 3.17% last month.

The IIP growth for March was better than expected and with key segments like the Capital Goods and manufacturing showing steady signs of improvement; industrial activity is expected to pick-up pace in the next few months.

Source : Equity Bulls

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