Dwindling manufacturing activity on the back of subdued demand conditions contracted India's October factory output by (-)3.8 per cent.
However, the Index of Industrial Production (IIP) data suggested that downward production spiral has somewhat been arrested with October's output declining by (-)3.8 per cent from (-)4.3 per cent in September 2019.
On a year-on-year basis, the growth rate of factory output during the month under review was nowhere near the rise of 8.4 per cent recorded during October 2018.
"The Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of October 2019 stands at 127.7, which is 3.8 per cent lower as compared to the level in the month of October 2018," the Ministry of Statistics & Programme Implementation said.
"The cumulative growth for the period April-October 2019 over the corresponding period of the previous year stands at 0.5 per cent," it added.
As per the data, the output rate of the manufacturing sector contracted by (-)2.1 per cent in October from a YoY rise of 8.2 per cent.
Similarly, the output of other notable sectors such as mining and electricity declined in the month under review.
The data revealed that mining activity declined by (-)8 per cent from a YoY growth of 7.3 per cent and the sub-index of electricity generation was lower by (-)12.2 per cent from a rise of 10.8 per cent.
Among the six use-based classification groups, the output of primary goods, which has the highest weightage of 34.04, fell by (-) 6 per cent. Nonetheless, the output of intermediate goods, which has the second highest weightage, zoomed 22.2 per cent.
While consumer non-durables output slipped (-)1.1 per cent, consumer durables declined by (-)18 per cent.
Output of infrastructure or construction goods decreased (-)9.2 per cent. Similarly, capital goods' production receded by (-)21.9 per cent.
In terms of industries, 18 of the 23 industry groups in the manufacturing sector have showed negative growth in October compared with the year-ago month.
"Despite an unfavourable base effect and the disruption caused by the late withdrawal of the monsoon, the pace of the YoY de-growth in industrial output narrowed in October 2019 relative to the previous month. Nevertheless, industrial production has recorded a sobering contraction for three months in a row," said Aditi Nayar, Principal Economist, ICRA.
According to M. Govinda Rao, Chief Economic Advisor, Brickwork Ratings: "The continued contraction in Industrial output as shown by 3.8 per cent contraction in IIP is also a cause for serious concern.
"These point towards the fact that GDP growth in the industry sector in the third quarter may not be very different from that of the second quarter and as even the high growth witnessed in public administration and defence in the second quarter may not materialise, the economy may actually slide down further."
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