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Factory growth hits fast track in January: Manufacturing surges 8.7% as economy shows signs of revival

Factory growth hits fast track in January: Manufacturing surges 8.7% as economy shows signs of revival

The manufacturing sector, which provides quality jobs to the workforce and constitutes 77.63 per cent of the IIP, surged by 8.7 per cent during the month reflecting signs of recovery in the economy observed in the October-December quarter continuing into the last quarter of the current fiscal year ending on March 31.

Photo: Reuters Photo: Reuters

Industrial growth shot up to 7.5 per cent in January 2018 up from 3.5 per cent in the same month last year on the back of a robust performance of the manufacturing sector, according to data released by the Central Statistics Office (CSO) on Monday.

The Index of Industrial Production (IIP) had grown at 7.1 per cent in December 2017. The manufacturing sector, which provides quality jobs to the workforce and constitutes 77.63 per cent of the IIP, surged by 8.7 per cent during the month reflecting signs of recovery in the economy observed in the October-December quarter continuing into the last quarter of the current fiscal year ending on March 31.

The output of capital goods, comprising machines used in factories, which reflects the real investment taking place in the economy went up by as much as 14.6 per cent in January, 2018 as against a decline of 0.6 per cent in the same month last year.

Consumer non-durable goods, which include fast moving consumer goods such as soaps, cosmetics and processed foods, also recorded a double digit growth of 10.5 per cent during the month.

Consumer durable goods such as TVs, mobile phones, washing machines and refrigerators registered an 8 per cent growth rate in January.

However, the mining sector saw a flat growth of 0.1 per cent compared to 8.6 per cent a year ago.

As per use-based classification, the growth rates in January 2018 over January 2017 are 5.8 per cent in primary goods, 4.9 per cent in intermediate goods and 6.8 per cent in infrastructure/construction goods.

In terms of industries, 16 out of 23 industry groups in the manufacturing sector showed positive growth during the month.

CII director general Chandrajit Banerjee said the higher growth in January augurs well for the return of broad based recovery in industrial performance during the year. The rising trend in manufacturing growth also shows that the underlying growth momentum is positive, he added.

What is encouraging is that the capital goods sector has posted robust growth during the month backed by new orders and improved demand, Banerjee said. Looking ahead, we expect that industrial performance would be on a clear upslope with both consumption and investment picking up pace during the year, he added.

Inflation at 4-month low

The country's retail inflation eased for the second consecutive month in February but remained above the RBI's 4 per cent target, strengthening views that the central bank will hold rates steady at its monetary policy review in April rather than raising them.

Consumer price inflation on an annual basis, measured by the CPI index, eased to 4.44 per cent in February, data released by the Ministry of Statistics showed on Monday.

January saw annual consumer inflation of 5.1 percent, off the December figure of 5.2 percent, which was the highest rate in 17 months.

Consumer food prices rose 3.26 percent in February, compared with 4.70 percent in January, as prices of pulses fell more than 17 percent from a year earlier.

Inflation in vegetables was 17.57 per cent last month, down from 26.97 per cent in January), and for fruits it was 4.80 per cent (as against 6.24 per cent). Milk and dairy products, too, saw inflation easing to 4.21 per cent. The increase in meat & fish prices slowed to 3.31 per cent while for eggs the prices grew at a pace of 8.51 per cent.