Industrial production grew 2.7% year-on-year in April compared to a revised 3.9% in March. The Ministry of Statistics and Program Implementation released this data on Wednesday. Manufacturing activity continued to drive overall growth despite sectoral variations.
Economist expectations were significantly lower at just 1% growth for April. The actual performance demonstrates underlying industrial resilience. Mixed signals across different sectors reveal changing consumption patterns and economic dynamics.
India's industrial output slowed to 2.7% year-on-year in April as against revised 3.9% in March according to data released by the Ministry of Statistics and Program Implementation. Economists polled by Reuters were expecting growth of only 1% making the actual performance a positive surprise. The factory output measured in terms of the Index of Industrial Production rose by 5.2% in April 2024 the data showed. This indicates that while growth has moderated from March levels the industrial sector continues to maintain momentum. The IIP serves as a key indicator of economic health measuring output across manufacturing, mining and electricity generation sectors.
Manufacturing output which carries the largest weight in the index advanced 3.4% in April as against 3% in the previous month showing acceleration in factory production. Electricity generation decreased sharply to 1.1% in demand from 6.3% in March presumably due either to lesser demand or supply constraints. Mining activity contracted by 0.2% in April from an expansion of 0.4% a month ago, reflecting challenges in the extractive industries. The output of consumer durables such as cars and phones rose by 6.4% in April, indicating a heightened demand for discretionary goods. In contrast, the output of consumer non-durables such as food products and toiletries fell by 1.7%, indicating softer consumption in essential goods. This divergence shows changing consumer spending behavior with households putting durable goods ahead of daily needs.
The acceleration of manufacturing growth to 3.4 per cent shows resilience in industry in view of the headwinds affecting the general economy. A 6.4 per cent jump sees the consumer durables sectors seeing strong discretionary spending from certain consumer groups. However, a 1.7 per cent drop in consumer non-durables would mean a bite to essentials either because inflationary pressures stand or because there are income-cutting factors against it. Industries providing downstream raw materials would feel the injury from contraction in mining while the slowing growth in generation of electricity may be a seasonal thing or a demand moderation one.
The performance, exceeding economist expectations by a sizable margin, suggested some actual industrial strength behind the numbers. Revisions to production data from recent months suggest that a good deal of volatility has always existed in industrial production trends. Seasonality does seem to play a role in industrial output for April, especially in heavily season-dependent sectors sensitive to weather and agricultural cycles.