iifl-logo-icon 1

Invest wise with Expert advice

By continuing, I accept the T&C and agree to receive communication on Whatsapp

  • Open Demat with exclusive Advice & Services
  • Get a dedicated Relationship Manager to help you grow your wealth
  • Exclusive advisory on 20+ trading & wealth-based investment options
  • One tap Investments, Automated trading & much more
  • Minimum 1 lakh margin required
sidebar image

June 2022 IIP tapers to 12.3% as manufacturing slows

15 Aug 2022 , 11:30 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.

Weight Segment IIP Index
IIP Index
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!

Related Tags

  • IIP
  • June IIP
  • manufacturing
sidebar mobile


Read More

Most Read News

Gold Declines in Early Trade
13 Jun 2024|09:00 AM
Top 10 stocks for today – 13th June, 2024
13 Jun 2024|08:59 AM
Bourses expected to open positively
13 Jun 2024|08:49 AM
Oil Prices Decline
13 Jun 2024|08:47 AM
Read More

Invest Right News

BSE: Firing on all cylinders
10 Apr 2024|12:07 PM
Read More
Knowledge Centerplus

Logo IIFL Customer Care Number
1860-267-3000 / 7039-050-000

Logo IIFL Securities Support WhatsApp Number
+91 9892691696

Download The App Now

Knowledge Centerplus

Follow us on


2024, IIFL Securities Ltd. All Rights Reserved

  • Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
  • KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
  • No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

  • 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
  • On an average, loss makers registered net trading loss close to Rs. 50,000.
  • Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
  • Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.
Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

We are ISO 27001:2013 Certified.

This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.