India’s Industrial Production Soars to 5.2% in November, Reaching Six-Month High

India’s industrial output surged to a six-month high of 5.2% year-on-year in November, driven by strong gains in the manufacturing sector, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday.

India’s Manufacturing Sector Drives Growth

Manufacturing output rose by 5.8% in November, leading the growth. Electricity generation and mining activity also contributed, with gains of 4.4% and 1.9%, respectively.

In comparison, October saw manufacturing expand by 4.4%, electricity generation increase by 2%, and mining activity grow by 0.9%. Economists polled by Reuters had expected industrial output to grow by 4.1% in November, making the actual growth a positive surprise.

Despite the monthly rebound, the cumulative industrial output growth for the April-November period stood at 4.1%, lower than the revised 6.5% growth recorded during the same period last year. While the uptick in November provides a boost to India’s economic outlook, the overall slowdown underlines the challenges the industrial sector faces in maintaining momentum.

India’s Manufacturing Sector Shows Resilience

The manufacturing sector performed strongly, growing 5.8% in November compared to just 1.3% last year. This growth was largely driven by a low base effect and a revival in capital goods and consumer durable goods production. Madan Sabnavis, chief economist at Bank of Baroda, noted that the positive trend during the festival season was a good sign.

However, he emphasized the need for sustainability, stating that if this momentum is maintained, manufacturing growth could end between 5.0-5.5% for the year.

Capital Goods And Consumer Durables Show Strong Performance

Capital goods production, a proxy for fixed investments, rose by 9% in November, rebounding from a 1.1% contraction in the same month last year. Similarly, consumer durables production grew by 13.1%, a sharp contrast to a 4.5% contraction in November 2023. These trends suggest a recovery in consumer sentiment and investment activity, which could further boost industrial growth in the coming months.

Modest Growth And Base Effects

While November’s industrial growth is encouraging, Aditi Nayar, chief economist at ICRA Ltd, pointed out that the average growth over October-November (4.4%) offers a better gauge of underlying momentum.

She noted that consumer durables (9.2%) and infrastructure goods (7.3%) contributed significantly, while primary goods (2.6%) and consumer non-durables (1.5%) showed weaker performance. ICRA forecasts IIP growth to moderate to 3-5% in December 2024, compared to 5.2% in November 2024.

India Industrial Output Growth Maintains Momentum

The industrial output growth rate, which stood at 5.2% in April, has maintained its momentum throughout the year, except for a contraction in August. The rebound in industrial output in the latter part of the year is largely attributed to the festival demand for manufactured goods and electricity generation.

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