NEW DELHI – Output of eight core infrastructure industries contracted by 5.2 per cent in September, the lowest in the decade, indicating the severity of economic slowdown.
As many as seven of eight core industries saw a contraction in output in September. Coal production fell steeply by 20.5 per cent, crude oil by 5.4 per cent, and natural gas by 4.9 per cent. Refinery products (-6.7 per cent), cement (- 2.1 per cent), steel (-0.3 per cent), and electricity (-3.7 per cent) output too declined.
The only infrastructure segment to post growth in September was fertilizers where production increased by 5.4 per cent year-on-year.
The eight core sectors had expanded by 4.3 per cent in September 2018, according to official data released on Thursday.
During the April-September period, the growth of core industries fell to 1.3 per cent against 5.5 per cent in the year-ago period.
Commenting on the data, India Ratings and Research, said that such low growth in core sector industries has not been witnessed so far in either 2011-12 base or 2004-05 base series.
“This clearly indicates the severity of the ongoing industrial slowdown,” it said adding even on a cumulative basis, the performance is “dismal”.
ICRA expects the Index of Industrial Production (IIP) to report a contraction of 2.5-3.5 per cent in September.
“In particular, the YoY decline in the output of coal, crude oil and natural gas, is likely to weigh upon the performance of the mining index of the IIP in September. Moreover, manufacturing may report a YoY contraction in September,” it added.
Earlier this month, the RBI revised downwards its GDP growth forecast for the current fiscal to 6.1 per cent from the previous estimate of 6.9 per cent after the first-quarter economic growth slipped to over six-year low of 5 per cent.
India manufacturing activity growth drops to 2-year low in October
Manufacturing activity in the country continued to weaken in October, with factory orders and production rising at the weakest rates in two years, a monthly survey said on Friday.
The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) fell to a two-year low of 50.6 in October from 51.4 in September.
This indicates only a marginal improvement in the health of the manufacturing industry, the survey said. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
As per the IHS Markit survey, the cooling of manufacturing sector conditions in India continued in October, with both factory orders and production rising at the weakest rates for two years. “Subsequently, job creation softened to a six-month low, while companies were reluctant to hold excess stock and lowered input buying in response,” it noted.
The PMI data for October showed a continuation of manufacturing sector weakness in India, “with sales growth softening to the slowest in two years”, said Pollyanna De Lima, Principal Economist at IHS Markit. “Weakening demand had a domino effect in the manufacturing industry, knocking down rates of increase in production, employment and business sentiment,” Lima said.
With quantities of purchases contracting for the third month in a row, Lima pointed out that input costs fell for the first time in over four years during October.