India: Disappointing February IIP dampens recovery prospects
- February IIP disappointed sharply at -1.9% YoY (our expectation: 0.5% YoY), belying any expectation of a tepid turnaround in the industrial sector
- Drag from manufacturing, consumer and capital goods was significant and contraction in consumer non durables is worrying, implying muted consumption demand
- Muted performance in IIP to continue through FY2014 and possibly for H1 of FY2015 as well and poses downside risk to the Government’s GDP estimate for FY2014
February IIP disappoints; posts a nine month low print
Industrial production for February notched -1.9% YoY despite a sharp uptick in the core sector print (4.5% YoY). However, the January number has been revised upward to 0.8% YoY from 0.1% YoY earlier. April-February industrial production has contracted by 0.1% YoY.
Manufacturing drag worsens; mining and electricity hold their own
contraction has also accelerated as compared to January and the sequential momentum contracted in February after two months of positive prints. Bleak manufacturing activity is also being reflected in the weakness in exports growth seen over the last few months. Within manufacturing, 13 out of the 22 industries have shown negative growth.
The mining sector however seems to have turned the corner and postedpositive growth for the fourth consecutive month. The electricity sector remains the saving grace and posted a stellar growth of 11.5% YoY, which was expected as per the core sector outcome.