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DECEMBER IIP: GREW BY MERELY 1.6%
q December IIP grew at 1.6%, slowest pace in last 20 months on a higher
base last year; December 2009 IIP growth was staggering 18%, highest
ever!!
q On a MoM seasonally adjusted basis growth in December was (-1.7%)
against (-7.8%) in November. The cumulative growth for the period April-
December, 2010-11 stands at 8.6% over the corresponding period of the
previous year.
q IIP, after peaking in March 10 has come off a bit towards its trend level.
Going forward, we expect moderate improvements in IIP, as base effect
benefits wane. In our view, the economy is likely to continue on its
growth trajectory of over 8% GDP growth, and IIP is likely to be over 8%
for the fiscal. With low base effect benefits behind us, high base effect
would continue to put pressure on IIP growth numbers (YoYs) for next
few months (IIP growth from Jan-May averaged over 15% last year).
q On a 3 M moving average, IIP slowed to 5.2% from 9% in September and
double digit figures in late 2009. Within the pack, consumer durables
stood out with a growth of 18.5% despite coming off a high base of
previous year (up 41% in December 2009). The main encouraging growth
came from consumer durables which grew by 18.5% against a very high
base of 41% in December 2010. Inflation data for the month of January
to be released on Monday would set the tone of RBI's hawkishness.
Key highlights
The sectoral growth (use-based classification) has been as under:
n Basic goods: 5.2% (against 6.4% in November)
n Capital goods: -13.7% (against 12.8% in November)
n Intermediate goods: 6.6% (against 2.3% in November)
n Consumer goods: 3.9% (against -2.0% in November)
n Consumer durables: 18.5% (against 4.4% in November)
n Consumer non-durables: -1.1% (against -4.6% in November)
IIP for the Mining, Manufacturing and Electricity sectors for the month of December
2010 stand at 216.9, 385.0, and 249.3 respectively, with the corresponding growth
rates of 3.8%, 1.0% and 6.0% as compared to December 2009. The cumulative
growth during April- December, 2010-11 over the corresponding period of 2009-10
in these three sectors have been 7.7%, 9.1% and 4.7% respectively, which moved
the overall growth in the General Index to 8.6%.
As per Use-based classification, the sectoral growth rates in December 2010 over
December 2009 are 5.2% in Basic goods, (-) 13.7% in Capital goods and 6.6% in
Intermediate goods. The Consumer durables and Consumer non-durables have recorded
growth of 18.5% and (-) 1.1% respectively, with the overall growth in Consumer
goods being 3.9%.
In terms of industries, twelve out of the seventeen industry groups have shown positive
growth during the month of December 2010. The industry group 'Jute and other
vegetable fibre Textiles (except cotton)' have shown the highest growth of 58.6%,
followed by 21.6% in 'Other Manufacturing Industries' and 21.0% in 'Metal Products
and Parts, except Machinery and Equipment'. On the other hand, the industry
group 'Wood and Wood Products; Furniture and Fixtures' have shown a negative
growth of 17.3% followed by 12.8% in 'Machinery and Equipment other than
Transport equipment'
During the current month, negative growth has been observed in Capital goods and
Consumer non-durable goods. Important items registering highly negative growth
include 'Computer system and its peripherals' [(-) 52.2%], 'Agricultural implements'
[(-) 49.6%], 'Ship building and repair' [(-) 46.7%], 'Insulated cables/wires all kinds'
[(-) 42.5%] and 'Material handling equipment in cl.wagon' [(-) 35.6] in case of Capital
goods and 'Cigarettes' [(-) 34.3], 'Hair oil/ayurvedic hair oil' [(-) 34.2%] and 'Rice
bran oil' [(-) 31.6%] in case of Consumer non-durable goods. Moreover 'Photo film/
roll film' [(-) 43.9%] and 'Endosulfan technical' [(-) 32.2%] of Intermediate goods
are also showing highly negative growth
IIP on 4M moving average basis peaked off in March 2010 and have come off from
about 20% growth to near zero, a complete cycle. Seasonally adjusted IIP growth
indicates sharp volatility due to volatile capital goods number. We believe that the
best of IIP in growth numbers is well behind us and going forward for next few
months IIP numbers would continue to edge lower and may disappoint if the economic
growth moderates from here on due to high base effect. We continue to expect
the IIP growth for the fiscal to be about 8.5%.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DECEMBER IIP: GREW BY MERELY 1.6%
q December IIP grew at 1.6%, slowest pace in last 20 months on a higher
base last year; December 2009 IIP growth was staggering 18%, highest
ever!!
q On a MoM seasonally adjusted basis growth in December was (-1.7%)
against (-7.8%) in November. The cumulative growth for the period April-
December, 2010-11 stands at 8.6% over the corresponding period of the
previous year.
q IIP, after peaking in March 10 has come off a bit towards its trend level.
Going forward, we expect moderate improvements in IIP, as base effect
benefits wane. In our view, the economy is likely to continue on its
growth trajectory of over 8% GDP growth, and IIP is likely to be over 8%
for the fiscal. With low base effect benefits behind us, high base effect
would continue to put pressure on IIP growth numbers (YoYs) for next
few months (IIP growth from Jan-May averaged over 15% last year).
q On a 3 M moving average, IIP slowed to 5.2% from 9% in September and
double digit figures in late 2009. Within the pack, consumer durables
stood out with a growth of 18.5% despite coming off a high base of
previous year (up 41% in December 2009). The main encouraging growth
came from consumer durables which grew by 18.5% against a very high
base of 41% in December 2010. Inflation data for the month of January
to be released on Monday would set the tone of RBI's hawkishness.
Key highlights
The sectoral growth (use-based classification) has been as under:
n Basic goods: 5.2% (against 6.4% in November)
n Capital goods: -13.7% (against 12.8% in November)
n Intermediate goods: 6.6% (against 2.3% in November)
n Consumer goods: 3.9% (against -2.0% in November)
n Consumer durables: 18.5% (against 4.4% in November)
n Consumer non-durables: -1.1% (against -4.6% in November)
IIP for the Mining, Manufacturing and Electricity sectors for the month of December
2010 stand at 216.9, 385.0, and 249.3 respectively, with the corresponding growth
rates of 3.8%, 1.0% and 6.0% as compared to December 2009. The cumulative
growth during April- December, 2010-11 over the corresponding period of 2009-10
in these three sectors have been 7.7%, 9.1% and 4.7% respectively, which moved
the overall growth in the General Index to 8.6%.
As per Use-based classification, the sectoral growth rates in December 2010 over
December 2009 are 5.2% in Basic goods, (-) 13.7% in Capital goods and 6.6% in
Intermediate goods. The Consumer durables and Consumer non-durables have recorded
growth of 18.5% and (-) 1.1% respectively, with the overall growth in Consumer
goods being 3.9%.
In terms of industries, twelve out of the seventeen industry groups have shown positive
growth during the month of December 2010. The industry group 'Jute and other
vegetable fibre Textiles (except cotton)' have shown the highest growth of 58.6%,
followed by 21.6% in 'Other Manufacturing Industries' and 21.0% in 'Metal Products
and Parts, except Machinery and Equipment'. On the other hand, the industry
group 'Wood and Wood Products; Furniture and Fixtures' have shown a negative
growth of 17.3% followed by 12.8% in 'Machinery and Equipment other than
Transport equipment'
During the current month, negative growth has been observed in Capital goods and
Consumer non-durable goods. Important items registering highly negative growth
include 'Computer system and its peripherals' [(-) 52.2%], 'Agricultural implements'
[(-) 49.6%], 'Ship building and repair' [(-) 46.7%], 'Insulated cables/wires all kinds'
[(-) 42.5%] and 'Material handling equipment in cl.wagon' [(-) 35.6] in case of Capital
goods and 'Cigarettes' [(-) 34.3], 'Hair oil/ayurvedic hair oil' [(-) 34.2%] and 'Rice
bran oil' [(-) 31.6%] in case of Consumer non-durable goods. Moreover 'Photo film/
roll film' [(-) 43.9%] and 'Endosulfan technical' [(-) 32.2%] of Intermediate goods
are also showing highly negative growth
IIP on 4M moving average basis peaked off in March 2010 and have come off from
about 20% growth to near zero, a complete cycle. Seasonally adjusted IIP growth
indicates sharp volatility due to volatile capital goods number. We believe that the
best of IIP in growth numbers is well behind us and going forward for next few
months IIP numbers would continue to edge lower and may disappoint if the economic
growth moderates from here on due to high base effect. We continue to expect
the IIP growth for the fiscal to be about 8.5%.
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