Factory output bounces back in Jan, expands by 2.7%

Industrial production bounced back in January expanding by 2.7% year-on-year mainly due to better performance by the capital goods segment, a barometer of investment activities.

The factory output, measured in terms of Index of Industrial Production (IIP), had contracted by 0.1% in December on account of cash crunch following demonetisation of high value currency notes.

The industry output had expanded by 5.53% in November. The capital goods segment grew by 10.7% in January against a contraction of 21.6% in the same month of last financial year.

The basic goods category expanded by 5.3% against 1.9% growth in January 2016. On the other hand, the intermediate goods category contracted by 2.3%. Despite quickening of remonetisation process, the consumers goods segment contracted by 1% in January. It comes over a 0.1% decline in January 2016.

In the consumer goods segment, durable items expanded by 2.9%, but non-durable contracted by 3.2%. IIP as a whole had contracted by 1.6% in January 2016. On cumulative basis, IIP during April-January 2016-17 showed an expansion of 0.6%, which was lower than 2.7% reported in the year-ago period.

The indices of industrial production for mining, manufacturing and electricity sectors posted growth rates of 5.3%, 2.3% and 3.9% respectively in January 2017. The cumulative growth in these three sectors during April-January 2016-17 was 1.4%, (-) 0.2% and 5.0%, respectively.

In total, nine out of the 22 industry groups in the manufacturing sector have shown positive growth during January 2017 on annual basis.

The industry group 'electrical machinery and apparatus' has shown the highest growth of 42.4% followed by 21.8% in 'radio, TV and communication equipment and apparatus' and 12.4 percent in 'basic metals'.

On the other hand, the industry group 'office, accounting and computing machinery' has shown the highest negative growth of 16% followed by 14.8% in 'food products and beverages' and 13.4% in 'other transport equipment'.

Some important items that have registered high negative growth include 'HR Sheets', 'ship building and repairs', 'sugar', and 'PVC pipes and tubes'.