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INDIA PRODUCTION –
Moderation continues
India has finally announced a new industrial
production (IP) with an updated base year 2004-05
from 1993-94. IP continued the decelerating trend
although the newly revised data show the underlying
growth to be better than what was indicated by the
old time series.
The revised data are a better representation of the
industrial base. The new time series covers 22
industry groups compared to 17 groups under the
1993-94 base year, and the total number of items has
jumped to 682 versus 538 in the old base year. The
number of item groups has risen to 397 from 281,
with the increase of 116 item groups concentrated in
the manufacturing sub-sector.
The weight of the manufacturing sub-sector has
declined to 75.5% (from 79.4%), while that of
mining increased substantially to 14.2% from 10.5%.
The weight of the electricity sub-sector edged up to
10.3% from 10.2%. The new series shows stronger
but still moderating industrial activity compared to
the old series. This is in line with expectations and
confirms that the old IP series was overstating the
pace moderation. For 2010-11, IP is now estimated to
have grown 8.2% from 7.8% reported previously.
For 1Q11, revised IP grew 7.7% YoY (old series:
5.2%), indictaing upside risk to the recently
announced GDP growth of 7.8%.
Seasonally adjusted, IP edged down 0.3% MoM in
April, a still-decent outcome considering the 3%
MoM surge in the prior month. April IP grew 6.3%
YoY, lower than the March reading of 8.8% (March
was 7.3% in the old time series). The new time series
shows a better tone for capital goods but continuing
moderation in consumer durables. Capital goods rose
a strong 14.5% YoY despite a high growth of 35.5%
in April 2010. In contrast, consumer durables in April
gained a mere 3.8%YoY (April 2010: 23.3%).
IP growth is expected to continue to moderate as
higher interest rates slow down activity, a desired
policy goal. We maintain our expectation of a 25bp
hike by the RBI on 16 June. Real GDP is likely to
grow 7.5% in 2011-12, down from 8.5% in 2010-11.
The monsoon season remains a two-sided risk to the
growth outcome for this fiscal year
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
INDIA PRODUCTION –
Moderation continues
India has finally announced a new industrial
production (IP) with an updated base year 2004-05
from 1993-94. IP continued the decelerating trend
although the newly revised data show the underlying
growth to be better than what was indicated by the
old time series.
The revised data are a better representation of the
industrial base. The new time series covers 22
industry groups compared to 17 groups under the
1993-94 base year, and the total number of items has
jumped to 682 versus 538 in the old base year. The
number of item groups has risen to 397 from 281,
with the increase of 116 item groups concentrated in
the manufacturing sub-sector.
The weight of the manufacturing sub-sector has
declined to 75.5% (from 79.4%), while that of
mining increased substantially to 14.2% from 10.5%.
The weight of the electricity sub-sector edged up to
10.3% from 10.2%. The new series shows stronger
but still moderating industrial activity compared to
the old series. This is in line with expectations and
confirms that the old IP series was overstating the
pace moderation. For 2010-11, IP is now estimated to
have grown 8.2% from 7.8% reported previously.
For 1Q11, revised IP grew 7.7% YoY (old series:
5.2%), indictaing upside risk to the recently
announced GDP growth of 7.8%.
Seasonally adjusted, IP edged down 0.3% MoM in
April, a still-decent outcome considering the 3%
MoM surge in the prior month. April IP grew 6.3%
YoY, lower than the March reading of 8.8% (March
was 7.3% in the old time series). The new time series
shows a better tone for capital goods but continuing
moderation in consumer durables. Capital goods rose
a strong 14.5% YoY despite a high growth of 35.5%
in April 2010. In contrast, consumer durables in April
gained a mere 3.8%YoY (April 2010: 23.3%).
IP growth is expected to continue to moderate as
higher interest rates slow down activity, a desired
policy goal. We maintain our expectation of a 25bp
hike by the RBI on 16 June. Real GDP is likely to
grow 7.5% in 2011-12, down from 8.5% in 2010-11.
The monsoon season remains a two-sided risk to the
growth outcome for this fiscal year
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