Industrial production shrinks by 1.1 pc in August; poorest performance in 7 years
New Delhi, Oct 11: Signs of slowdown became more pronounced as the government data on Friday revealed factory output shrank by 1.1 per cent in August, recording the poorest performance in seven years due to a sharp decline in production of capital goods and consumer durable.
Industrial production growth for the first time in more than two years has treaded into negative territory.
The Index of Industrial Production (IIP) had shown a growth of 4.8 per cent in August 2018. The previous low in IIP was (-) 1.7 per cent in November 2012.
The manufacturing sector, which contributes over 77 per cent to the IIP, contracted by 1.2 per cent, the lowest in five years, as against a growth of 5.2 per cent in the year-ago month, according to the data released by the National Statistical Office (NSO).
The previous low in the manufacturing segment was recorded at (-) 1.8 per cent in October 2014.
The data revealed that electricity generation growth too was in negative at (-) 0.9 per cent as against an expansion of 7.6 per cent in the year-ago month while the mining sector growth was flat at 0.1 per cent.
Earlier this month, the RBI revised downwards its GDP growth forecast for the current fiscal to 6.1 per cent from the previous estimate of 6.9 per cent after the first-quarter economic growth slipped to over six-year low of 5 per cent.
Providing further details of the IIP, the NSO data showed the worst performance came from the capital goods segment as its output shrank by over 21 per cent as against an expansion of 10.3 per cent in August last year.
Consumer durables output too declined by 9.1 per cent in August 2019 as against 5.5 per cent growth in the same month of 2018.
Another poor performing segment was infrastructure/ construction goods. It showed a decline of 4.5 per cent in August 2019 as against a growth of 8 per cent in the corresponding month of last year.
'Intermediate goods' sector, however, showed a healthy growth of 7 per cent, up from 2.9 per cent in the year-ago month. Consumer non-durables segment posted an expansion of 4.1 per cent in August. This compares with 6.5 per cent expansion in August 2018.
In terms of industries, 15 out of the 23 industry groups in the manufacturing sector have shown negative growth during August 2019 as compared to the corresponding month of the previous year.
Commenting on the IIP numbers, K Joseph Thomas, Head Research, Emkay Wealth Management said the data amply reflects the underlying weakness in manufacturing and industrial activity which needs to be addressed without much loss of time for economic recovery.
Aditi Nayar, Vice President, Principal Economist there is a growing likelihood that the GDP growth may not meaningfully accelerate in the second quarter of the current fiscal from the multi-quarter low 5 per cent recorded in April-June quarter, despite a favourable base effect.
The extent of pickup in consumption in the festive months and crop production in the rabi season will signal whether a material turnaround in demand and economic growth are in the offing, she said.
Moody's Investors Service on Thursday slashed its 2019-20 GDP growth forecast for India to 5.8 per cent from 6.2 per cent earlier, saying the economy was experiencing a pronounced slowdown.
Meanwhile, the NSO revised upwards the IIP growth for July to 4.6 per cent from the earlier estimate of 4.3 per cent.
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Iran attacks oil tanker near Dubai; Trump warns of strikes on energy sites if Hormuz remains shut
Tel Aviv/Washington: Iran attacked and set ablaze a fully loaded crude oil tanker off Dubai on Monday after US President Donald Trump warned that Washington would target Iran’s energy infrastructure if the Strait of Hormuz is not reopened.
According to a Reuters report, the Kuwait-flagged tanker Al-Salmi is owned by Kuwait Petroleum Corporation and was capable of carrying around 2 million barrels of crude. . It was struck in what authorities later described as a drone attack. The company said the incident occurred early Tuesday, causing a fire and hull damage. No injuries were reported and the fire was brought under control, Dubai authorities said .
Oil prices rose briefly following the attack and added to volatility in global energy markets. In the United States, retail gasoline prices crossed $4 per gallon for the first time in more than three years, according to data from GasBuddy, as crude prices moved above $101 per barrel.
Israel said it carried out missile strikes on military infrastructure in Tehran and on sites linked to Iran-backed Hezbollah in Beirut. Explosions were reported in parts of Tehran, with Iran’s Tasnim news agency saying power outages occurred in the eastern Pirouzi district following the blasts.
The Israel Defense Forces said four soldiers were killed in southern Lebanon. In recent days, three peacekeepers serving with the United Nations Interim Force in Lebanon were also killed in separate incidents in the same area.
Iran’s military spokesperson said Tehran’s latest wave of missile and drone strikes targeted US military positions at five bases in the region and sites in Israel. Thousands of troops from the US Army’s 82nd Airborne Division have begun arriving in the Middle East, according to US officials, expanding Washington’s military options even as diplomatic efforts continue.
White House Press Secretary Karoline Leavitt told Reuters Trump wants an agreement with Iranian leaders before a revised April 6 deadline for reopening the Strait of Hormuz, adding that talks were progressing, while public statements from Tehran differed from private communications.
Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said proposals received through intermediaries were “unrealistic” and maintained that Iran was focused on defending itself.
In a social media post, Trump said that if a deal is not reached soon and the strait is not reopened, the US would strike Iran’s electric generating plants, oil wells and Kharg Island. However, a report in The Wall Street Journal said Trump had told aides he may be willing to end the military campaign even if the strait remains largely closed and address reopening it later. The White House referred to earlier remarks by Secretary of State Marco Rubio that the strait would be opened “one way or another.”
The administration has also requested an additional $200 billion in funding for the conflict, a proposal that faces opposition in the US Congress.
