IIP numbers disappoint for a second month on account of de-growth in capital goods

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Sep IIP Numbers
Nov 15, 2010
IIP numbers for the month of September 2010 came in at 4.4% which
was way below consensus market expectations and marked the second
consecutive month of disappointing IIP numbers. The growth for the
month of August 2010 was however revised upwards to 6.9% from
5.6%. Manufacturing which constitutes almost 80% of IIP witnessed a
sharp slowdown to 4.5% as compared to a growth of 7.5% in August
2010. Mining too witnessed a slowdown to 5.3% as compared to 6.6%
in August 2010. Electricity growth however improved from a subdued
level of 1.0% to 1.7% in September.
With regards to the use based classification Capital goods which de-
grew by -4.2% YoY played spoilsport and accounted for the significant
variation between market expectations and the actual numbers.
Consumer goods growth slowed down to 5.2% due to a sharp slowdown
in durables growth at 10.9% as compared to a growth of 27.1% in
August 2010. Consumer non-durables registered a growth of 2.5% as
compared a growth of 0.8% in August 2010. Intermediate and basic
goods grew by 10.3% and 3.5% respectively.
Manufacturing growth slowed down sharply as machinery and
equipment de-grew by 1.8% YoY in September as against a growth of
0.8% YoY in August. Transport equipments maintained its healthy
growth trend and grew by 21.6% YoY.
The sharp slowdown in the September IIP numbers is largely on
account of the unusual volatility in capital goods numbers which
witnessed a sharp spike in July 2010 before coming off sharply in
August and September. We are also seeing the advantage of the low
base effect wearing off. Going forward industrial growth is expected to
pick up from the current levels to high single digits for the rest of
FY2011. However growth for FY2011 would be lower than the 10.2%
growth witnessed during April – September 2010.
Month
2009-2010 2010-2011 2009-2010 2010-2011 2009-2010 2010-2011 2009-2010 2010-2011
August 178.1 189.9 325.8 350.2 245.1 247.6 302.1 323.0
September 174.9 184.1 339.8 355.2 235.8 239.9 312.0 325.6
YoYGrowth
INDEXOFINDUSTRIALPRODUCTION-SECTORAL
5.3% 4.5% 1.7% 4.4%
Mining(10.5%) Manufacturing(79.4%) Electricity(10.1%) General(100%)
Month
2009-2010 2010-2011 2009-2010 2010-2011 2009-2010 2010-2011
August 243.3 252.1 459.7 469.3 307.8 342
September 236.8 245.0 591.7 566.8 298.4 329
YoY Growth
INDEX OF INDUSTRIAL PRODUCTION - USE BASED
Basic Goods (35.6%) Capital Goods (9.3%) Intermed. Goods (26.5%)
3.5% -4.2% 10.3%
Month
2009-2010 2010-2011 2009-2010 2010-2011 2009-2010 2010-2011
August 319.1 346.2 498.6 633.5 277.8 280
September 327.5 344.5 563.2 624.4 273.2 280
YoY Growth
INDEX OF INDUSTRIAL PRODUCTION - USE BASED
Cons. Goods (28.7%) Cons. Durables (5.4%) Cons. Non-Durables (23.3%)
5.2% 10.9% 2.5%