Factory output grew six-month high of 5.2 per cent in November, government data released on Friday showed

The growth, measured on the basis of changes in Index of Industrial Production (IIP), was 3.5 per cent in October. According to a Statistics Ministry, the growth rates of three sectors – Mining, Manufacturing and Electricity – for November were 1.9 per cent, 5.8 per cent and 4.4 per cent, respectively. These were 0.9 per cent, 4.4 per cent and 2.8 per cent in October.

The previous high growth rate at 6.3 per cent was recorded in May. It grew by 4.9 per cent in June and 5 per cent in July. The IIP growth was flat in August before picking up at 3.1 per cent in September and 3.7 per cent in October. The growth in the factory output, measured in terms of the IIP, in April-November 2024 grew by 4.1 per cent against 6.5 per cent in the year-ago period, the data showed.

Festival demand

As per use-based classification, the capital goods segment growth accelerated to 9 per cent in November against a contraction of 1.1 per cent in the year-ago period. Showing festive demand, consumer durables (or white goods) production grew by 13.1 per cent during the reporting month against a contraction of 4.8 per cent in November 2023.

In November, consumer non-durables output growth remained almost flat at 0.6 per cent compared to a contraction of 3.4 per cent in November 2023. According to the data, infrastructure/construction goods reported a growth of 10 per cent in November, up from a 1.5 per cent expansion in the year-ago period.

The data also showed that the output of primary goods logged a 2.7 per cent growth in November 2024 against 8.4 per cent a year earlier. The expansion in the intermediate goods segment was 5 per cent in the month under review, higher than 3.4 per cent a year ago.

Overall growth

 “Given the base effects related to the shifting festive dates, an average growth over October-November tends to provide a better gauge of the underlying momentum,” Aditi Nayar, Chief Economist with ICRA said. By this yardstick, overall industrial growth was modest at 4.4 per cent, driven by consumer durables (9.2 per cent) and infra/construction goods (7.3 per cent), with a distinctly lacklustre performance of primary goods (2.6 per cent) and consumer non-durables (1.5 per cent).

“ICRA expects the IIP growth to moderate to 3-5 per cent in December 2024 (+4.4 per cent in December 2023) from 5.2 per cent in November 2024 (+2.5 per cent in November 2023), partly on account of an unfavorable base,” Nayar said.

According to Paras Jasrai, Senior Analyst with India Ratings & Research, going forward, a high base effect would weigh on the industrial sector growth in the near term. The high frequency indicators so far appear to be a mixed bag. While the electricity demand further refined to a six-month high of 5.3 per cent y-o-y, petroleum consumption and crude steel production remained subdued at around 2 per cent y-o-y in December 2024. All in all, “Ind-Ra expects the IIP growth to be around 3 per cent y-o-y in December,” he said.