11.12.10

IIP October figures bounce



After a gap of three months, industrial growth has bounced back into the double-digit zone on the back of healthy manufacturing output and electricity generation. The faster-than-expected 10.8% growth in October will provide comfort to policymakers as there were concerns over the sustainability of the overall economic momentum in the wake of deceleration in the industrial sector which accounts for around a quarter of the gross domestic product (GDP). A faster growth also augurs well for job creation. Industrial growth, measured by the index of industrial production, had decelerated to 4.39% in August and 6.92% in September.Economists said that while it would be difficult to predict the future pattern of industrial growth, given the volatility in data in recent months, the October numbers showed that the country’s economy was healthy and demand remained strong.
Indications available suggest that industrial growth in November will be better. The Purchasing Managers' Index, based on a survey of 500 manufacturing firms, has indicated that November’s growth will be the highest in several months. The manufacturing sector, which accounts for 80% of overall industrial output, grew 11.3% in October compared to 10.8% a year ago. The electricity sector grew 8.8% against 4% in October 2009, while mining rose 6.5% compared to 9.1% a year ago. Among the 17 industry groups, transport equipment and parts rose 39.5%, leather and fur products (26%) and other manufacturing industries (24.6%), data from the Central Statistics Office showed. Sectoral data showed that the capital goods sector grew 22%, intermediate goods rose 9.5% and basic goods 7.7%. While consumer durables such as cars, televisions, motorcycles and refrigerators rose 31%, consumer non-durables remained sluggish, growing a paltry 0.1%.

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