January factory output growth robust at 5.2%

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NEW DELHI: Industrial output growth remained healthy in January on the back of robust performance in electricity, mining, capital goods, infrastructure and gathering strength in the manufacturing sector.
Data released by the National Statistical Office (NSO) on Friday showed the Index of Industrial Production (IIP) rose an annual 5. 2% in January compared to the upwardly revised 4. 7% in December and higher than the 2% recorded in January 2022. During April to January, the IIP growth was at 5. 4% compared to 13. 7% in the same period a year earlier.
The manufacturing sector, which accounts for a bulk of the index, rose an annual 3. 7% compared to the 1. 9% expansion in January 2022. The electricity sector grew 12. 7% in January compared to the 0. 9% expansion in the same month ayear earlier. The mining sector rose 8. 8% during the month compared to the 3% expansion in January 2022.
The capital goods sector, a key gauge of industrial activity, grew 11% in January compared to 1. 8% in January 2022 while the infrastructure and construction goods sectors rose 8. 1% compared to the 5. 9% growth in the year earlier period.
“Surprisingly, manufacturing output increased by 3. 7% yoy, up from 2. 7% in December. We think this was driven partly by the low base, but possibly also by anticipated improved demand in light of China’s reopening news,” Barclays said in a research note.
“The data suggests that manufacturing is still stronger in India than elsewhere in Asia, as also shown in PMI data. The details stood out further, showing a pick-up in manufacturing of computers and electronicseven amid a tech downcycle,” the note added.
The anticipated global slowdown is expected to weigh on the country’s manufacturing sector but strong domestic demand is expected to hold up and provide support to overall growth.
The IIP data showed the consumer durables sector contracting 7. 5% in January compared to a decline of 4. 4% in January 2022. Consumer non-durables rose a robust 6. 2% during the month compared to a 3. 1% growth in January 2022.
“Despite the subdued base related to the third wave of Covid, some of the available high frequency indicators recorded aweaker YoY performance in February 2023, relative to January, such as Coal India’s output, rail freight traffic, ports cargo traffic, electricity generation and auto output,” said ICRA’s Aditi Nayar.



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