FACTORY ACTIVITY SHOWS NO SIGNS OF REVIVAL
May industrial production rose 2.4% vs a contraction of 0.9% in April. On a seasonally-adjusted basis, May IIP was up 2.5% vs -1.0% seen in April. (April data was revised down from 0.1% to -0.9%). Thus, on a cumulative basis, growth during Apr-May FY13 came in at 0.8% v/s 5.7% in the same period last year. Manufacturing rose 2.5%, with growth led by communication equipment, machinery and metal products. This offset the contraction in electrical/textile machinery and medical/optical instruments. Capital goods remained in the red for the third consecutive month, down 7.7% due to a 31% fall in textile machinery.
CONSUMPTION TRENDS: DEVIL IN THE DETAIL
The key contributor to better than estimated IIP and manufacturing sector growth came from stronger than expected data on consumer goods production. Consumer goods grew 4.3% in May’12 vs 3.7% in the previous month and was largely in nature of consumer durables (+9.3% vs +5.2% in Apr’12). The strong growth in consumer durables could be up on seasonal aspects because the leading indicators suggest consumption demand is slowing down. The contrasting data could hint at increasing inventories levels and does not denote improving demand.
LEADING INDICATORS A SIGN OF WORRY
- >Steep 29% yoy decline in bank credit to towards consumer durables
- > Sluggish 15% yoy growth in housing loans a
- > June’12 domestic car sales at 8.6% yoy vs 20% yoy in Mar’12 and two wheeler sales at 9.2% yoy vs 15% yoy last year.
May industrial production rose 2.4% vs a contraction of 0.9% in April. On a seasonally-adjusted basis, May IIP was up 2.5% vs -1.0% seen in April. (April data was revised down from 0.1% to -0.9%). Thus, on a cumulative basis, growth during Apr-May FY13 came in at 0.8% v/s 5.7% in the same period last year. Manufacturing rose 2.5%, with growth led by communication equipment, machinery and metal products. This offset the contraction in electrical/textile machinery and medical/optical instruments. Capital goods remained in the red for the third consecutive month, down 7.7% due to a 31% fall in textile machinery.
CONSUMPTION TRENDS: DEVIL IN THE DETAIL
The key contributor to better than estimated IIP and manufacturing sector growth came from stronger than expected data on consumer goods production. Consumer goods grew 4.3% in May’12 vs 3.7% in the previous month and was largely in nature of consumer durables (+9.3% vs +5.2% in Apr’12). The strong growth in consumer durables could be up on seasonal aspects because the leading indicators suggest consumption demand is slowing down. The contrasting data could hint at increasing inventories levels and does not denote improving demand.
LEADING INDICATORS A SIGN OF WORRY
- >Steep 29% yoy decline in bank credit to towards consumer durables
- > Sluggish 15% yoy growth in housing loans a
- > June’12 domestic car sales at 8.6% yoy vs 20% yoy in Mar’12 and two wheeler sales at 9.2% yoy vs 15% yoy last year.
With 100 cr + population we can count on internal consumption but for how long?? Upward price pressure on daily commodities is going to kill enthusiasm.
ReplyDeleteGod (Finance Minister) help us!!