Update: October IIP contracts to 4.2% y-o-y on poor manufacturing output

October industrial production contracted by 4.2 per cent to log the sharpest decline in at least two years, dashing hopes of recovery, on poor performance by the manufacturing sector and dip in the output of capital as well as consumer goods.

The factory output, as measured by the Index of Industrial Production (IIP), had declined by 1.2 per cent in the corresponding month in the 2013-14 financial year.

For September, IIP data was revised to 2.8 per cent from the provisional estimates of 2.5 per cent released in November, according to the data released by the Central Statistics Office (CSO) on Friday.

During the April-October period, IIP rose 1.9 per cent, as against 0.2 per cent in same period of FY14.

Manufacturing output, which constitutes over 75 per cent of the index, contracted by 7.6 per cent in October, compared to a dip of 1.3 per cent in the year-ago month.

For April-October, the sector saw an output growth of 0.7 per cent, compared to a contraction 0.1 per cent in the corresponding period of the 2013-14 financial year.

The production of capital goods, a barometer of demand, declined by 2.3 per cent in October, as against a growth of 2.5 per cent in corresponding reporting month.

During April-October period, the output of capital goods grew by 4.8 per cent as against a dip in production by 0.2 per cent.

The consumer goods output too contracted by 18.6 per cent in October as against a decline in output at 5 per cent logged in October of FY14.

For April-October FY15, the segment showed a contraction of 6.3 per cent, compared to a decline of 1.7 per cent in the same period of 2013-14.

Overall, 16 of the 22 industry groups in manufacturing showed negative growth in October.