IIP - A non-durable spike ::Edelweiss, PDF link

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IIP grew sharply by 6.8% YoY in January against a weak, but upwardly revised 2.5% in December thanks to an unusual spurt in consumer non-durables (up ~42% YoY). Ex-non-durables, IIP contracted 0.8%. Such spikes in IIP (and its components) make it totally difficult to capture the underlying trend in the industrial activity. We feel that MoM 3MMA seasonally adjusted data does a better job in capturing the trend. On this basis, it seems that the industrial activity has improved in Nov-Jan period compared to the extremely weak phase of Jun-Oct 2011. This is consistent with the improvement in PMI data. Nonetheless, it is too early to comment on the nature of the surge as much will depend on the policy action by the government in the forthcoming budget (and otherwise) and also the pace of monetary easing throughout the coming year.

IIP - A non-durable spike