Industrial output contracts in April

Background: Index of Industrial Production (IIP), GDP, Central Statistics Office (CSO), National Statistical Commission.

  • A contraction in manufacturing output dragged industrial production growth back in to the negative zone in April, rekindling concerns if a turnaround has indeed taken place and also raising fresh worries over the quality of the data.
  • Official data showed that factory output shrank 0.8 percent in April, its first decline in three months. It had expanded 3 percent in April last year.
  • Manufacturing sector (which constitutes over three-fourths of the IIP) contracted 3.1 percent in April compared to a growth of 3.9 percent in same month last year.
  • Reflecting this deficiency, IIP data has been inconsistent with GDP data: While the CSO data put real manufacturing growth at 9.3 percent in the January-March period, it was at odds with the IIP data for the same quarter, which showed a mere increase of 0.2 percent.

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