Contraction In Industrial Production For November Not Surprising: Analysts On IIP Data

IIP Data: Industrial manufacturing shrank by 1.9 per cent in November 2020

The industrial manufacturing in November 2020 shrank by 1.9 per cent, reversing the small positive aspects witnessed within the earlier two months of the 12 months. The index of business manufacturing (IIP) registered progress in October 2020. The manufacturing sector output declined by 1.7 per cent in November 2020. The mining output additionally contracted 7.3 per cent, whereas energy technology grew 3.5 per cent, authorities knowledge confirmed. According to a analysis report by Barclays, whereas hostile base results partly drove the decline, the exercise additionally moderated sequentially because of operating out of inventory-rebuilding pushed product demand. Overall, the month witnessed exercise transferring sideways with most indicators both declining or sustaining largely comparable ranges to prior months in November. (Also ReadIndustrial Production Contracts 1.9% In November 2020 )

Here are some views and remarks from economists and analysts on the index of business manufacturing in November 2020:

Ms. Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India:

“The contraction in IIP for November is not surprising as the other high frequency economic indicators were also showing a moderation in growth. A lot of economic revival seen in the previous few months had been because of pent-up demand and festive demand, hence the growth momentum was expected to moderate. With daily COVID infection rate reducing, vaccine round the corner and the economy close to normalcy, the critical aspect will be at what level the growth momentum stabilizes”

Mr. Nish Bhatt, Founder & CEO, Millwood Kane International, an funding consulting agency:

”Post a restoration in industrial manufacturing in October, the IIP knowledge for the month of November has plunged once more, the unfavorable print or de-growth in IIP is a reason behind concern, this uneven progress places some doubt on the restoration in total financial progress. Falling IIP, core sector knowledge hints that RBI ought to wait and stick with simple liquidity measures, authorities with additional reforms and stimulus measures within the upcoming Union Budget..”


Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research:

“The IIP print for Nov 2020 has been disappointing with a YoY contraction of 1.9 per cent as against a growth of 3.6 per cent witnessed in Oct 2020. The data reflects the uneven trajectory of the ongoing industrial recovery, the continuing uncertainty on a broad based demand revival beyond the pent up levels and also the slowdown in the export momentum over the last 1-2 months.”

”The persisting weakness in segments such as oil refining, textiles, apparels and paper continue to thwart a broader industrial recovery. Further, both consumer durables and non-durables production have seen a stagnation vis-à-vis last year, highlighting the uncertainty on consumer demand beyond the festive months. Given the lack of consistency in the IIP print, any meaningful GDP growth may be unlikely in Q3 FY21.”

Dr. Sunil Kumar Sinha, Principal Economist, India Ratings & Research:

”After 2 consecutive months of constructive progress, manufacturing unit output (Index of Industrial Production (IIP)) as soon as once more exhibits a contraction of 1.9 per cent within the month of November 2020. India Ratings and Research (Ind-Ra) had earlier stated – “two consecutive months of positive growth is a good sign for the economy but we may have to watch the data for few months to believe that economy is firmly on a path of recovery.”

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