June 2022 IIP tapers to 12.3% as manufacturing slows
- India Infoline News Service
- 15 Aug , 2022
- 11:27 AM
After hovering around an average of 2.25% between November 2021 and March 2022, the IIP number jumped to 6.74% in April 2022 and further to 19.64% in May 2022. However, in the month of June, the IIP tapered to 12.3% as manufacturing and mining tapered on the back of lower output amidst supply chain constraints. However, what is gratifying about the June 2022 IIP growth of 12.3% is that it comes on a strong base of 13.81% growth in June 2021.
Data Source: MOSPI
It must be remembered that the IIP growth is yet to fully get over the COVID impact. In fact, there have been a series of headwinds over the last 30 months. First there was COVID-1, then there was COVID-2 and later Omicron. This was followed by the Russia-Ukraine war, the resultant supply chain constraints and persistent monetary tightening by the world’s leading central banks including the US Fed, the Bank of England, the European Central Bank and even India’s own RBI. Hence over a 3 year period, the IIP growth would still be under strain.
However, the IIP appears to be on a positive growth trajectory now.
Let us also turn to the IIP revisions for the previous months. When it comes to IIP, the monthly numbers go through two revisions; the first revised estimate after 1 month and the final revised estimate after 3 months. The first revised IIP estimate for May 2022 was maintained at a level of 19.64%. However, the final revised estimates of IIP growth for March 2022 was revised sharply higher from 2.20% to 3.76%. This is a positive signal.
Getting a hang of the sectoral break-up of June 2022 IIP growth
June 2022 marks the third month of the current fiscal year FY23 and we now have data for a quarter. Let us begin with the three components of IIP viz. mining, manufacturing and electricity for June 2022. Mining sector growth for June 2022 came in at 7.49%, manufacturing at 12.46% and Electricity grew at an impressive 16.44%. Across the spectrum, there was tapering of growth in mining, manufacturing and electricity compared to May 2022. Not surprisingly, the overall IIP growth for June 2022 once again gravitated towards manufacturing growth at 12.46%, considering its weightage of 77.63% in the IIP basket.
Let us also look at the cumulative first quarter picture for the period from April 2022 to June 2022. For FY23 till date, mining grew at 9.0%, manufacturing at 12.7% and electricity at 17.1%. The cumulative IIP growth for FY23 till date stands at an impressive 12.7%, despite a rapidly growing base of last year.
Which products drove the IIP growth in June 2022
IIP growth of 12.3% for June 2022 is surely an impressive number, albeit lower than the May figure. Here is a quick look at specific products that triggered the 12.3% growth in the IIP. Let us first focus on the IIP depressants. There were 2 products that saw negative IIP growth in June 2022. Pharma & botanical products saw de-growth of -4.1% while the manufacture of textiles saw de-growth of -3% in June 2022.
Among the key positive contributors in the month of June 2022 were Tobacco products at +52.8%, beverages at +44.8%, manufacture of computers and electronics at +44%, recorded media at +43.1%, apparel at +32%, motor vehicles +31.2%, transport equipment at +30.2% and furniture at +27.7%. However, if you look at the first 3 months to June 2022, then only pharma showed negative growth while positive thrust was led by the beverages category.
How does the IIP look from a use-based perspective? In terms of user groups, capital goods grew 26.1% and consumer durables at 23.8%. Among other user groups, infrastructure grew 8.0%, intermediate goods at 11.0% and primary goods at 13.1%. However, consumer non-durables continued to show tepid growth at just 2.9% for the month of June 2022.
Don’t miss the IIP high frequency story for June 2022
We can break up the 12.3% IIP growth for June 2022 into mining, manufacturing and electricity. But, more importantly, it is the high frequency month-on-month growth that gives the most precise picture of short term momentum in the IIP basket.
Data Source: MOSPI
There is not much of questioning on the yoy numbers, although it may have slowed compared to May 202. IIP for June 2022 has grown decisively over June 2021 by 12.3% and it is across mining, manufacturing and electricity. This growth has been achieved on a fairly high base, so that is growth on its own merit. For the month of June 2022, there has been tapering in growth in mining, manufacturing and electricity and that is reflected in the overall lower IIP growth for June 2022 compared to May 2022. However, that does not take away from the underlying strength shown by the IIP numbers.
Let us now turn to the high frequency MOM growth. The MOM growth was decisively positive in the month of May 2022 but almost flat, growing at just +0.15% in June 2022. What is actually gratifying is that the overall high frequency IIP has been positive despite mining and electricity seeing negative growth over May 2022. Manufacturing with the highest 77.6% weightage showed positive MOM growth. The MOM growth picture shows mining -5.81%, manufacturing +1.34% and electricity -1.50%. Overall MOM IIP growth at +0.15% is much lower than the 2.30% MOM growth in May 2022, but surely better than negative MOM growth in April 2022.
Now IIP will hold the key to future RBI policy
Since March 2022, the RBI has almost been obsessed with cutting down inflation and towards that end it has already hiked rates by 140 basis points. However, the inflation has also come down in response from 7.79% to 6.71% over the last two months. That is positive and shows that RBI hawkishness is working. Already, the US Fed has given hints that they may go slow on rate hikes as they do not want to hamper the growth engine. Remember, the growth engine is the big advantage that India has, so the story is the same here also.
Going ahead, the IIP number could start mattering and the RBI would be wary of any sharp fall in high frequency IIP. The RBI has been aggressive and front-loaded rate hikes so that in future it can adopt course correction. if required. From the October 2022 policy, the IIP could once again start to matter to the RBI policy stance. That is the good news!
Data Source: MOSPI
It must be remembered that the IIP growth is yet to fully get over the COVID impact. In fact, there have been a series of headwinds over the last 30 months. First there was COVID-1, then there was COVID-2 and later Omicron. This was followed by the Russia-Ukraine war, the resultant supply chain constraints and persistent monetary tightening by the world’s leading central banks including the US Fed, the Bank of England, the European Central Bank and even India’s own RBI. Hence over a 3 year period, the IIP growth would still be under strain.
However, the IIP appears to be on a positive growth trajectory now.
Let us also turn to the IIP revisions for the previous months. When it comes to IIP, the monthly numbers go through two revisions; the first revised estimate after 1 month and the final revised estimate after 3 months. The first revised IIP estimate for May 2022 was maintained at a level of 19.64%. However, the final revised estimates of IIP growth for March 2022 was revised sharply higher from 2.20% to 3.76%. This is a positive signal.
Getting a hang of the sectoral break-up of June 2022 IIP growth
June 2022 marks the third month of the current fiscal year FY23 and we now have data for a quarter. Let us begin with the three components of IIP viz. mining, manufacturing and electricity for June 2022. Mining sector growth for June 2022 came in at 7.49%, manufacturing at 12.46% and Electricity grew at an impressive 16.44%. Across the spectrum, there was tapering of growth in mining, manufacturing and electricity compared to May 2022. Not surprisingly, the overall IIP growth for June 2022 once again gravitated towards manufacturing growth at 12.46%, considering its weightage of 77.63% in the IIP basket.
Let us also look at the cumulative first quarter picture for the period from April 2022 to June 2022. For FY23 till date, mining grew at 9.0%, manufacturing at 12.7% and electricity at 17.1%. The cumulative IIP growth for FY23 till date stands at an impressive 12.7%, despite a rapidly growing base of last year.
Which products drove the IIP growth in June 2022
IIP growth of 12.3% for June 2022 is surely an impressive number, albeit lower than the May figure. Here is a quick look at specific products that triggered the 12.3% growth in the IIP. Let us first focus on the IIP depressants. There were 2 products that saw negative IIP growth in June 2022. Pharma & botanical products saw de-growth of -4.1% while the manufacture of textiles saw de-growth of -3% in June 2022.
Among the key positive contributors in the month of June 2022 were Tobacco products at +52.8%, beverages at +44.8%, manufacture of computers and electronics at +44%, recorded media at +43.1%, apparel at +32%, motor vehicles +31.2%, transport equipment at +30.2% and furniture at +27.7%. However, if you look at the first 3 months to June 2022, then only pharma showed negative growth while positive thrust was led by the beverages category.
How does the IIP look from a use-based perspective? In terms of user groups, capital goods grew 26.1% and consumer durables at 23.8%. Among other user groups, infrastructure grew 8.0%, intermediate goods at 11.0% and primary goods at 13.1%. However, consumer non-durables continued to show tepid growth at just 2.9% for the month of June 2022.
Don’t miss the IIP high frequency story for June 2022
We can break up the 12.3% IIP growth for June 2022 into mining, manufacturing and electricity. But, more importantly, it is the high frequency month-on-month growth that gives the most precise picture of short term momentum in the IIP basket.
| Weight | Segment |
IIP Index Jun-21 |
IIP Index Jun-22 |
IIP Growth Over Jun-21 |
IIP Growth (HF) Over May-22 |
| 0.1437 | Mining | 105.50 | 113.40 | +7.49% | -5.81% |
| 0.7764 | Manufacturing | 121.20 | 136.30 | +12.46% | +1.34% |
| 0.0799 | Electricity | 169.10 | 196.90 | +16.44% | -1.50% |
| 1.0000 | Overall IIP | 122.80 | 137.90 | +12.30% | +0.15% |
Data Source: MOSPI
There is not much of questioning on the yoy numbers, although it may have slowed compared to May 202. IIP for June 2022 has grown decisively over June 2021 by 12.3% and it is across mining, manufacturing and electricity. This growth has been achieved on a fairly high base, so that is growth on its own merit. For the month of June 2022, there has been tapering in growth in mining, manufacturing and electricity and that is reflected in the overall lower IIP growth for June 2022 compared to May 2022. However, that does not take away from the underlying strength shown by the IIP numbers.
Let us now turn to the high frequency MOM growth. The MOM growth was decisively positive in the month of May 2022 but almost flat, growing at just +0.15% in June 2022. What is actually gratifying is that the overall high frequency IIP has been positive despite mining and electricity seeing negative growth over May 2022. Manufacturing with the highest 77.6% weightage showed positive MOM growth. The MOM growth picture shows mining -5.81%, manufacturing +1.34% and electricity -1.50%. Overall MOM IIP growth at +0.15% is much lower than the 2.30% MOM growth in May 2022, but surely better than negative MOM growth in April 2022.
Now IIP will hold the key to future RBI policy
Since March 2022, the RBI has almost been obsessed with cutting down inflation and towards that end it has already hiked rates by 140 basis points. However, the inflation has also come down in response from 7.79% to 6.71% over the last two months. That is positive and shows that RBI hawkishness is working. Already, the US Fed has given hints that they may go slow on rate hikes as they do not want to hamper the growth engine. Remember, the growth engine is the big advantage that India has, so the story is the same here also.
Going ahead, the IIP number could start mattering and the RBI would be wary of any sharp fall in high frequency IIP. The RBI has been aggressive and front-loaded rate hikes so that in future it can adopt course correction. if required. From the October 2022 policy, the IIP could once again start to matter to the RBI policy stance. That is the good news!
May 2022 IIP bounces to 19.64% on manufacturing boost
- India Infoline News Service
- 13 Jul , 2022
- 11:42 AM
After hovering around the median 2.25% mark for 5 months between November 2021 and March 2022, the IIP number jumped to 6.74% in April 2022 and further to 19.64% in May 2022. What is gratifying about the IIP growth is that the 19.64% growth in May 2022 comes on a robust growth base of 27.61% in May 2021. However, that was because of a deeply negative IIP growth in May 2020, so on a 3 year basis, the IIP may be just about coming back to pre-COVID levels.
Data Source: MOSPI
The last 13 months of IIP data can be split into 3 distinct phases. The first phase between April 2021 and August 2021, was double digit IIP growth largely on the back of a low pandemic base. Between September 2021 and March 2022, the IIP has hovered around the median rate of 2.25%. The third phase has started from April 2022 onwards, wherein the growth has again bounced back despite a solid base month. Whether, this is a 2-year base impact or genuine recovery in growth will only be evident in the next few months.
How does sectoral break-up of May 2022 IIP sound?
May 2022 is the second month of the current fiscal year FY23. A cumulative picture may at best be sketchy, but we shall still briefly look at that picture. But, let us first look at the three components of IIP viz. mining, manufacturing and electricity for May 2022. Mining sector growth for May 2022 came in at 10.90%, manufacturing at 20.63% and Electricity grew at an impressive 23.47%. While Electricity led the IIP story, the thrust came from manufacturing growth at 20.63%, especially considering its weightage of 77.63% in the IIP basket. Let us quickly look at the cumulative Apr-May numbers too. For FY23 till date, mining grew at 9.4%, manufacturing at 12.8% and electricity at 17.4%. The cumulative overall IIP growth for FY23 till date stands at an impressive 12.9%, albeit on a lower 2-year base.
When it comes to IIP, the monthly numbers go through two revisions; the first revised estimate after 1 month and the final revised estimate after 3 months. The first revised IIP estimate for April 2022 was lowered by 40 bps from 7.14% to 6.74%. Similarly, the final revised estimate for February 2022 was lowered by 31 bps from 1.46% to 1.11%. One reason for this lowering could be the impact of the various domestic and global headwinds.
Key drivers of IIP growth in May 2022
IIP growth of 19.64% for May 2022 is surely an impressive number. Here is a quick look at which specific products drove the IIP. Let us first focus on the IIP depressants. There was just one product that saw negative IIP growth in May 2022 and that was pharma & botanical products which saw de-growth of -13.1% in May 2022. Among the positive contributors were transport equipment at +129%, beverages at +128%, motor vehicles at +88.7%, apparel at +69.9%, furniture at +68.7%, electrical equipment +59.6%, wood products at +56.1%, leather products at +48.9% and machinery at +38.8%.
How does it look when you look at IIP from a use-based perspective? In terms of user groups, consumer durables grew 58.5% and capital goods at 54%. Among other user groups, the infrastructure segment grew 18.2%, intermediate goods at 17.9% and primary goods at 17.7%. However, consumer non-durables continued to show flat to tepid growth at just 0.9% for the month of May 2022 while the cumulative growth for FY23 was just 0.1%.
A quick look at the high frequency IIP numbers
We can break up the 19.64% IIP growth for May 2022 into mining, manufacturing and electricity. But, more importantly, it is the high frequency month-on-month growth that really gives you a picture of the short term momentum in the IIP basket.
Data Source: MOSPI
There is not much of debate on the yoy numbers. IIP has grown decisively over May 2021 across mining, manufacturing and electricity. One can argue that the base of May 2020 was very low so even after 2 years of positive growth, the overall impact is almost neutral. That is technically correct, but that does not take away from the strength of the recovery. But, a clearer picture emerges from the high frequency month-on-month numbers and not from the yoy numbers. Let us turn to the high frequency numbers now.
Unlike April 2022, when high frequency IIP numbers were under a lot of pressure, May has seen positive growth in the high frequency IIP too. If you look at the table above, there is positive traction across the 3 segments of IIP on a month-on-month basis and that is indicative of the fact that the short term momentum is also favouring positive IIP growth, apart from the long term trend. The MOM growth picture shows mining +3.36%, manufacturing +2.05% and electricity +2.78%. Overall MOM IIP growth at 2.30% is in stark contrast to the negative high frequency IIP de-growth manifested in April 2022. What is also appreciable is that, this performance is despite global and domestic headwinds.
How much will the IIP data impact RBI monetary stance?
Since March 2022, the RBI tune has been about controlling inflation above all else. For now, the inflation continues to stay above 7% and that is the worry. Hence, the impact of the IIP number on the RBI monetary stance would be minimal. The central bank would be more worried about the fact that inflation is nearly 300 bps above the preferred median. The positive cues coming from the IIP front is good news for the RBI as it assures the central banks that the Indian economy has the resilience to handle a more hawkish monetary policy without compromising on industrial growth.
Global monetary policy is entering an interesting phase. There is likely to be an increasingly bitter battle between curbing inflation and avoiding an all-out recession. The US yield curve is already inverted and could make the Fed more cautious. For the August policy, one can expect another rate hike from the RBI. Beyond that, it would be purely data driven.
Data Source: MOSPI
The last 13 months of IIP data can be split into 3 distinct phases. The first phase between April 2021 and August 2021, was double digit IIP growth largely on the back of a low pandemic base. Between September 2021 and March 2022, the IIP has hovered around the median rate of 2.25%. The third phase has started from April 2022 onwards, wherein the growth has again bounced back despite a solid base month. Whether, this is a 2-year base impact or genuine recovery in growth will only be evident in the next few months.
How does sectoral break-up of May 2022 IIP sound?
May 2022 is the second month of the current fiscal year FY23. A cumulative picture may at best be sketchy, but we shall still briefly look at that picture. But, let us first look at the three components of IIP viz. mining, manufacturing and electricity for May 2022. Mining sector growth for May 2022 came in at 10.90%, manufacturing at 20.63% and Electricity grew at an impressive 23.47%. While Electricity led the IIP story, the thrust came from manufacturing growth at 20.63%, especially considering its weightage of 77.63% in the IIP basket. Let us quickly look at the cumulative Apr-May numbers too. For FY23 till date, mining grew at 9.4%, manufacturing at 12.8% and electricity at 17.4%. The cumulative overall IIP growth for FY23 till date stands at an impressive 12.9%, albeit on a lower 2-year base.
When it comes to IIP, the monthly numbers go through two revisions; the first revised estimate after 1 month and the final revised estimate after 3 months. The first revised IIP estimate for April 2022 was lowered by 40 bps from 7.14% to 6.74%. Similarly, the final revised estimate for February 2022 was lowered by 31 bps from 1.46% to 1.11%. One reason for this lowering could be the impact of the various domestic and global headwinds.
Key drivers of IIP growth in May 2022
IIP growth of 19.64% for May 2022 is surely an impressive number. Here is a quick look at which specific products drove the IIP. Let us first focus on the IIP depressants. There was just one product that saw negative IIP growth in May 2022 and that was pharma & botanical products which saw de-growth of -13.1% in May 2022. Among the positive contributors were transport equipment at +129%, beverages at +128%, motor vehicles at +88.7%, apparel at +69.9%, furniture at +68.7%, electrical equipment +59.6%, wood products at +56.1%, leather products at +48.9% and machinery at +38.8%.
How does it look when you look at IIP from a use-based perspective? In terms of user groups, consumer durables grew 58.5% and capital goods at 54%. Among other user groups, the infrastructure segment grew 18.2%, intermediate goods at 17.9% and primary goods at 17.7%. However, consumer non-durables continued to show flat to tepid growth at just 0.9% for the month of May 2022 while the cumulative growth for FY23 was just 0.1%.
A quick look at the high frequency IIP numbers
We can break up the 19.64% IIP growth for May 2022 into mining, manufacturing and electricity. But, more importantly, it is the high frequency month-on-month growth that really gives you a picture of the short term momentum in the IIP basket.
| Weight | Segment |
IIP Index May-21 |
IIP Index May-22 |
IIP Growth Over May-21 |
IIP Growth (HF) Over Apr-22 |
| 0.1437 | Mining | 108.30 | 120.10 | +10.90% | +3.36% |
| 0.7764 | Manufacturing | 111.50 | 134.50 | +20.63% | +2.05% |
| 0.0799 | Electricity | 161.90 | 199.90 | +23.47% | +2.78% |
| 1.0000 | Overall IIP | 115.10 | 137.70 | +19.64% | +2.30% |
There is not much of debate on the yoy numbers. IIP has grown decisively over May 2021 across mining, manufacturing and electricity. One can argue that the base of May 2020 was very low so even after 2 years of positive growth, the overall impact is almost neutral. That is technically correct, but that does not take away from the strength of the recovery. But, a clearer picture emerges from the high frequency month-on-month numbers and not from the yoy numbers. Let us turn to the high frequency numbers now.
Unlike April 2022, when high frequency IIP numbers were under a lot of pressure, May has seen positive growth in the high frequency IIP too. If you look at the table above, there is positive traction across the 3 segments of IIP on a month-on-month basis and that is indicative of the fact that the short term momentum is also favouring positive IIP growth, apart from the long term trend. The MOM growth picture shows mining +3.36%, manufacturing +2.05% and electricity +2.78%. Overall MOM IIP growth at 2.30% is in stark contrast to the negative high frequency IIP de-growth manifested in April 2022. What is also appreciable is that, this performance is despite global and domestic headwinds.
How much will the IIP data impact RBI monetary stance?
Since March 2022, the RBI tune has been about controlling inflation above all else. For now, the inflation continues to stay above 7% and that is the worry. Hence, the impact of the IIP number on the RBI monetary stance would be minimal. The central bank would be more worried about the fact that inflation is nearly 300 bps above the preferred median. The positive cues coming from the IIP front is good news for the RBI as it assures the central banks that the Indian economy has the resilience to handle a more hawkish monetary policy without compromising on industrial growth.
Global monetary policy is entering an interesting phase. There is likely to be an increasingly bitter battle between curbing inflation and avoiding an all-out recession. The US yield curve is already inverted and could make the Fed more cautious. For the August policy, one can expect another rate hike from the RBI. Beyond that, it would be purely data driven.
IIP growth turns around to 7.11% in November 2022
- 16 Jan , 2023
- 7:42 AM
- The latest IIP figure for November 2022 (IIP is announced with 1-month lag) marked a sharp turnaround in factory output growth.
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