Industrial Output Grew In October Despite Contraction In Eight Core Sectors – Unblendednews

Industrial Output Grew In October Despite Contraction In Eight Core Sectors


Output grew despite the contraction in eight core sectors by 2.5 per cent

The industrial production based on the index of industrial production (IIP) rebounded to an eight-month high and grew by 3.6 per cent year-on-year (YoY) as against a contraction by 6.6 per cent in the corresponding month of last year and the 0.2 per cent growth in September 2020. According to a recent report by CARE Ratings, the industrial output grew despite the contraction in eight core sectors by 2.5 per cent in October 2020, which has nearly 40 per cent weightage in the index of industrial production. The growth during the month was supported by the favorable base effect which resulted in significant growth registered by the manufacturing and electricity segments.

The manufacturing sector rebounded with the resumption of activities, supported by the demand in the festive season. Based upon the use-based classification, a five-year high growth in consumer durables, capital goods, and infrastructure/construction goods output growth at a near two-year high aided the overall output to expand suggestive of recovery in investment activities as well as consumer demand during the festive season. The mining sector output contracted by 1.5 per cent in October 2020 after
registering a growth by 1.4 per cent in September 2020. However, the pace of the decline in October 2020 was lower than the 8 per cent per cent fall in October 2019. While lower demand weighed on production, the resumption of activities partially capped the downside. 

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For the first time in nearly two years, capital goods production increased by 3.3 per cent in October 2020 as against 22.4 per cent contraction in the same month last year suggestive of pick up in investment activities in the country. In line with capital goods, the infrastructure/construction goods production too grew considerably by 7.8 per cent, highest in the past 22 months supported by favorable base and pick up of infrastructure activities.

At 17.6 per cent, consumer durables output growth was at a five year high supported by festive demand pickup and favorable base. In October 2019, consumer durables had contracted by 18.9 per cent. Consumer – non durables too grew by 7.5 per cent during the month higher than the 4.1 per cent growth a month ago and -3.4 per cent in October 2019. 



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