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India’s industrial output growth slumped to a five-month low of 4.2% in June, with manufacturing output growth dropping to a seven-month low of 2.6%, almost half the previous month’s growth, and electricity generation easing 2.8% from a record high in May in the face of an abating heat wave.
On the basis of end-use, production growth fell in all six segments compared to May, with consumer non-durables’ output shrinking 1.4% from last June, marking the second such contraction in three months.
The National Statistical Office also upgraded May’s Index of Industrial Production (IIP) to 6.2%, the highest in seven months, from its initial estimate of 5.9%. Mining was the only segment to clock an acceleration in growth in June, with output rising 10.3% year-on-year, from 6.6% in May. However, actual production levels were 1.2% lower than May.
Within manufacturing, which accounts for nearly 78% of the IIP, nine out of 23 segments reported a contraction this June, including beverages, textiles, leather products and pharmaceuticals. Three sectors reported a double-digit rise in production — electrical equipment (28.4%), furniture (16%) and computers and electronics (10.7%).
June’s industrial performance fell below most economists’ forecasts, despite a beneficial base from last year when output had grown 4%. Consumer durables’ production clocked the highest uptick of 8.6%, over a 6.8% contraction last year, while primary goods grew 6.3%.
Capital goods’ output growth slowed to 2.4% from 2.9% in May, but June’s production levels were the highest so far in 2024-25. Intermediate goods’ production growth cooled to 3.1% from 3.9% in May and 5.2% a year ago, while infrastructure and construction goods’ rose just 4.4% compared to 6.3% in May and 13.3% a year ago.
Overall industrial output has risen 5.2% in the first quarter of this year, compared with 4.7% in 2023-24, with consumer non-durables being the only segment to report a contraction through this period, with production dropping 0.5% from a 6.8% uptick last year.
While available high frequency data for July suggest mixed trends, rating agency ICRA said it expects IIP growth to be in the range of 2.5% to 4.5% last month, over an adverse base of 6.2% growth recorded last July. “With a slowdown in government capex amidst the elections and lacklustre rural demand as well, we also anticipate a moderation in the GDP growth print for the first quarter of this year,” reckoned Aditi Nayar, the firm’s chief economist.
