Data released by the National Statistical Office (NSO) on Friday showed the Index of Industrial Production (IIP) rose an annual 3. 1% in September from August’s contraction of 0. 7%. Growth in September 2021 was 4. 4%. For the April-September period, IIP growth was at a healthy 7% compared with a 23. 8% expansion in the previous year-ago period. Economists said despite signs of a revival in the sector, it remained sluggish as consumer durables and non-durables sectors contracted in September and continued to be a worry.
The electricity sector rose 11. 6% in September 2022 compared to 0. 9% in September 2021, while the mining sector grew by 4. 6%. The manufacturing sector rose 1. 8% in September compared to an expansion of 4. 3% in the year earlier period. The capital goods sector, a key gauge of industrial activity, grew 10. 3% compared to a growth of 3. 3% in September 2021.
“The year-on-year growth improved for primary, capital, infrastructure and intermediate goods in September 2022 relative to the previous month, while consumer non-durables reported a narrower contraction and the de-growth in consumer durables deepened,” said Aditi Nayar, chief economist at ratings agency ICRA.
“Relative to the pre-Covid levels, the IIP reported a healthy 8. 6% expansion in September 2022, with a rise in all the categories except consumer non-durables,” said Nayar.
Some economists said they expect an acceleration in consumption demand as inflation eases which should augur wellfor overall industrial growth.
“IIP growth for September has been higher than expectations. The strong growth recorded in the capital goods and infrastructure sector is encouraging and is hopefully a precursor to pick up in the capex cycle,” said Rajani Sinha, chief economist, CareEdge. “Improvement in domestic consumption demand will be critical for sustained recovery in growth momentum,” said Sinha.