Macro-economic update

Dec 12, 2011

CCILCCIL EconomicResearch Economic Research

Macro-Economic Updates
Dec 12, 2011 Industrial output shrinks by 5.1% in Oct11
o IIP posts steepest fall in 31 months during Oct11: Indias Index of Industrial Production (IIP) shrunk (-5.1%) for the first time after June 2009. The IIP fell by about 3.3% on M-o-M basis with a widespread dip in output in almost all the industrial sub-sectors. The cumulative IIP growth during Apr-Oct 2011 stood at 3.50% against 8.7% of the corresponding period a year ago. Manufacturing sector, having highest weight in IIP, recorded worst performance since Mar 2009 with 6.0% fall in Oct11 against 2.4% growth a month ago and 12.4% growth a year ago mainly due to sharp fall in output of Electrical machinery & apparatus and Machinery and equipment, etc. Mining & quarrying witnessed the worst performance in the five years registering 7.2% reduction in output in Oct11 though recovered at about 10% on M-o-M basis. All the use-based categories witnessed a fall in output, except basic good in Oct11. Capital goods recorded the steepest fall of 25.5% on Y-o-Y basis and over 20% on M-o-M basis in the month of Oct11 mainly due to a significant fall in output of Cable, Rubber Insulated, Cement Machinery, Insulated Cables/Wires all kind and Plastic Machinery including Moulding Machinery Cumulative output also declined by 0.3% during Apr-Oct 2011 against 17.1% growth in the corresponding period of 2010-11. Consumer durables also followed the similar trend as the output declined after 32 months. Output dipped by about 0.3% on Y-o-Y basis and 6.7% on M-o-M basis in the month of Oct11.
Chart 1: Growth Trends in Major Industry Categories (%)
40 30 20 10 0

o o

o o

Aug-11

Dec-10

Jan-11

Feb-11

Jul-11

Nov-10

Sep-11

Oct-10

Jun-11

Mar-11

Apr-11

-10 -20 -30

Transport Equipment

Cons. Durables

Capital goods

May-11

Manufacturing

Basic goods registered a marginal fall of 0.1% in Oct11 from 4.0% growth month ago and 9.8% growth a year ago.

Oct-11
IIP

Macro-economic update
o

Dec 12, 2011

CCIL Economic Research

Intermediate goods output also dipped by about 4.7% in Oct11 against 1.3% growth a month ago and 9.7% growth a year ago. Growth contributors at two -digit level: Nine of 22 two-digit industries accounting for over 50% of total manufacturing weight witnessed a fall in output in Oct11. In contrast, Electrical machinery & apparatus n.e.c. posted a 58.8% reduction in output followed by Machinery and equipment n.e.c. with 12.1%, Rubber and plastics products with 11.4% and Textiles with 11% reduction in Oct11. However, Medical, precision & optical instruments, watches and clocks posted the highest growth of 30.8%, followed by Office, accounting & computing machinery with 18.4%, Radio, TV and communication equipment & apparatus with 15.3% and Food products and beverages by 14.7%.

Outlook: Steady rise in interest rates have taken a toll on industrial investment as well as consumer demand particularly for consumer durables and the reduction in output became more widespread. Although the production of automobiles recovered in the month of Nov11 as per the latest data released by the Society of Indian Automobile Manufacturers (SIAM), persistence of the same in the coming months is still a questio n. On other hand, the HSBC India Manufacturing PMI moderated to 51 in Nov11 from 52 in Oct11. In view of this, it is apparent that industrial output may continue the falling trend in the month of Nov11.

Macro-economic update

Dec 12, 2011

CCIL Economic Research

Table 1: Growth Trends in Industrial Output (Base 2004-05=100)

Industry group General (IIP) Mining & quarrying Manufacturing Electricity Use-Based Classification Basic goods Capital goods Intermediate goods Consumer goods a)Consumer durables b)Consumer non-durables Major Manufacturing Industries (2-digit Classification) Food products and beverages Tobacco products Textiles Wearing apparel; dressing and dyeing of fur Luggage, handbags, saddlery, harness & footwear; tanning and dressing of leather products Wood and products of wood & cork except furniture; articles of straw & plating materials Paper and paper products Publishing, printing & reproduction of recorded media Coke, refined petroleum products & nuclear fuel Chemicals and chemical products Rubber and plastics products Other non-metallic mineral products Basic metals Fabricated metal products, except machinery & equipment Machinery and equipment n.e.c. Office, accounting & computing machinery Electrical machinery & apparatus n.e.c. Radio, TV and communication equipment & apparatus Medical, precision & optical instruments, watches and clocks Motor vehicles, trailers & semi -trailers Other transport equipment Furniture; manufacturing n.e.c. Infrastructure Index Source: Central Statistical Organization (CSO) 72.76 15.7 61.64 27.82 5.82 10.51 9.99 10.78 67.15 100.59 20.25 43.14 113.35 30.85 37.63 3.05 19.8 9.89 5.67 40.64 18.25 29.97 37.90 14.7 0.8 -11.0 -5.7 -2.1 1.9 2.1 2.7 -3.5 -6.7 -11.4 2.7 2.9 6.2 -12.1 18.4 -58.8 15.3 30.8 -7.1 1.9 0.3 0.1 15.6 -0.8 -3.2 -6.8 5.3 -2.7 5.0 8.0 4.1 -1.6 -2.7 2.6 12.8 13.0 -3.3 13.7 -14.2 6.6 2.1 10.6 15.0 0.3 4.3 355.65 92.57 265.14 283.64 53.65 232.99 -0.1 -25.5 -4.7 -0.8 -0.3 -1.3 5.8 -0.3 0.6 3.7 4.5 2.9 Weight Y-o-Y Growth (%) Oct-11 1000 141.57 755.27 103.16 -5.1 -7.2 -6.0 5.6 Apr-Oct 2011 3.5 -2.2 3.7 8.9

Macro-economic update

Dec 12, 2011

CCIL Economic Research

Economic Research Department The Clearing Corporation of India Limited Plot No FP 822, Off. S.K.Bole Road, College Lane, Opp NEAT House, Near Agar Bazaar, Dadar (W), Mumbai 400 028 Phone: 61546311/3 res_sur@ccilindia.co.in gcnath@ccilindia.co.in tlingareddy@ccilindia.co.in

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