Industrial growth for May to slip further: survey
10 Jul 2013
India's industrial output growth, after crawling at 2.3 per cent in April, will slip further in May, probably to a three-month low, dampened by weak output in the vital infrastructure sector, according to a Reuters survey.
The median forecast of 23 economists showed output at factories, mines and utilities grew an annual 1.6 per cent in May, after an upwardly revised 2.3 per cent in April. Weak global demand has further weighed on a recovery, the survey concludes.
Although the consensus estimate showed growth in industrial output for the fifth consecutive month, the pace is a far cry from the near 10 per cent seen between late 2009 and 2011.
Output in the eight key infrastructure industries, also known as the core sector and which makes up almost 40 per cent of the index of industrial production, slowed to an annual 2.3 per cent in May, from 2.4 per cent in April.
Recent data has shown persistent weakness in the Indian economy, which will not support the fragile recovery seen in the final three months of the previous fiscal year. The economy grew at its slowest annual pace in a decade in the fiscal year that ended in March.
The HSBC Manufacturing PMI survey(See: India's services sector expands while factory output shrinks), showed activity in Indian industries flirted with the 50 mark that separates growth from contraction in May and June, even though it has managed to hold above that level for over four years.
Car sales – a proxy for domestic consumer demand – fell for the seventh straight month in May, according to data from the Society of Indian Automobile Manufacturers (SIAM). The 2012-13 fiscal year ended March saw the first drop in growth in a decade.
Capital goods output, a key barometer of investment, rose an annual 1 per cent in April, but consumer demand is expected to remain tepid and weigh on the recovery in Indian factories.
Weak global demand has also hurt Indian factories as annual exports in May fell for the first time in five months, according to the Thomson-Reuters poll.
