NOVEMBER 2024 IIP EXPANDS FURTHER TO 5.17%
The IIP growth in November 2024 bounced further to 5.17% from 3.66% (revised upwards from 3.45%) in October 2024. However, this improvement in November comes largely from the base effect between October 2023 and November 2023, when the IIP had fallen sharply from 11.89% to 2.47%. There were also two revisions to the past months data on IIP. The IIP growth estimate for October 2024 saw its first upward revision from 3.45% to 3.66%. At the same time, the final revision for August 2024 IIP saw the -0.07% contraction being upgraded to neutral growth of 0.00%. Effectively, there was no contraction in August 2024.
IIP TROIKA – MINING, MANUFACTURING, ELECTRICITY
IIP is normally classified into 3 components; mining, manufacturing, and electricity. For November 2024; mining expanded by just 1.9% and electricity production at 4.4%. However, the real thrust came from manufacturing expanding by 5.8%, which resulted in overall IIP for November 2024 growing by 5.2%. Let us turn to the high frequency MOM IIP growth. For November, the MOM mining output grew by 4.12%. However, manufacturing contracted by -0.61% MOM, while electricity contracted by a whopping -11.41%. As a result, overall IIP also contracted MOM by -1.2%, indicating pressure in the short term.
HOW IIP GROWTH EVOLVED OVER LAST 1 YEAR
After the low of August (it has now turned from negative to neutral), the IIP has been consistently building heft in the last 3 months. Here is a quick dekko at the IIP numbers.
Month | IIP Growth (%) |
Nov-23 | 2.47% |
Dec-23 | 4.39% |
Jan-24 | 4.21% |
Feb-24 | 5.60% |
Mar-24 | 5.47% |
Apr-24 | 5.19% |
May-24 | 6.25% |
Jun-24 | 4.93% |
Jul-24 | 4.98% |
Aug-24 | 0.00% |
Sep-24 | 3.09% |
Oct-24 | 3.66% |
Nov-24 | 5.17% |
Data Source: MOSPI
Despite the pick-up in IIP, there are macro risks to the India growth story. GDP growth slowed to 5.4% in Q2FY25 and now the full FAE for FY25 is pegged at 6.4%. CAD may have come in lower at 1.2% of GDP for Q2; but it is no rocket science that is going to worsen.
NOVEMBER 2024 IIP: PRODUCT-WISE BREAK OF IIP BASKET
The table captures comparative IIP growth for last 4 months, with respective components. Overall numbers for mining, manufacturing, and electricity are segregated.
Product Basket | Weights | Aug-24 | Sep-24 | Oct-24 | Nov-24 |
Manufacture of food products | 5.3025 | -1.3 | 4.8 | 4.9 | -3.3 |
Manufacture of beverages | 1.0354 | -3.0 | 0.4 | 3.6 | 0.4 |
Manufacture of tobacco products | 0.7985 | -3.6 | 1.6 | 11.6 | 1.5 |
Manufacture of textiles | 3.2913 | 2.1 | 1.1 | 0.9 | 3.8 |
Manufacture of wearing apparel | 1.3225 | 15.0 | 1.2 | 6.3 | 7.9 |
Manufacture of leather and related products | 0.5021 | 2.1 | -2.4 | -3.8 | -3.3 |
Manufacture of wood products | 0.1930 | 9.7 | -1.3 | 10.0 | 8.9 |
Manufacture of paper products | 0.8724 | 0.9 | 3.3 | -0.3 | 2.7 |
Printing and reproduction of recorded media | 0.6798 | -8.5 | -2.7 | -9.7 | -7.7 |
Manufacture of coke and refined petroleum products | 11.7749 | -0.7 | 5.3 | 5.6 | 2.0 |
Manufacture of chemical products | 7.8730 | 2.1 | 4.7 | 2.1 | 3.4 |
Manufacture of pharmaceuticals | 4.9810 | -5.9 | 1.5 | 1.9 | 2.9 |
Manufacture of rubber and plastics products | 2.4222 | 6.5 | 9.5 | 7.0 | -1.4 |
Manufacture of other non-metallic mineral products | 4.0853 | -1.9 | 3.3 | 3.1 | 12.0 |
Manufacture of basic metals | 12.8043 | 3.8 | 2.2 | 4.9 | 7.6 |
Manufacture of fabricated metal products | 2.6549 | -7.2 | 2.4 | 8.1 | 19.6 |
Manufacture of computer, electronic and optical | 1.5704 | 11.6 | -1.7 | 0.6 | 18.7 |
Manufacture of electrical equipment | 2.9983 | 17.6 | 18.7 | 33.1 | 37.2 |
Manufacture of machinery and equipment | 4.7653 | -2.7 | 3.6 | -2.4 | 7.9 |
Manufacture of motor vehicles, trailers | 4.8573 | 0.5 | 2.1 | -1.7 | 5.2 |
Manufacture of other transport equipment | 1.7763 | 7.2 | 13.9 | 17.4 | 10.3 |
Manufacture of furniture | 0.1311 | 19.4 | 32.9 | 28.8 | 50.1 |
Other manufacturing | 0.9415 | -8.1 | 2.9 | -11.5 | -10.8 |
MINING | 14.3725 | -4.3 | 0.2 | 0.9 | 1.9 |
MANUFACTURING | 77.6332 | 1.2 | 3.9 | 4.4 | 5.8 |
ELECTRICITY | 7.9943 | -3.7 | 0.5 | 2.0 | 4.4 |
OVERALL IIP | 100.0000 | 0.0 | 3.1 | 3.7 | 5.2 |
Data Source: MOSPI
The last column shows the most current IIP reading for November 2024. Let us first look at the positive drivers of IIP growth. The positive thrust is coming largely from sectors like furniture, electrical equipment, fabricated metal products, computer & electronics, non-metallic minerals, transport equipment, wood products, and wearing apparel.
The negative pressure on IIP is coming from sectors like other manufacturing, printing & recorded media, leather products, and food products. On the downside, the story has shifted from weak export demand to weak domestic demand. However, the pressure on IIP appears to be more peripheral than structural; so, India can still come out of it.
A QUICK LOOK AT THE ANNUALIZED IIP DATA
The latest fiscal year FY25 now has 8 months cumulative data from April to November 2024; which is sufficient to extrapolate a picture for FY25. The cumulative IIP growth for FY25 is at 4.1%. That is sharply lower than last 3 years, albeit on a larger base.
Product Basket | Weights | 2021-22 | 2022-23 | 2023-24 | 2024-25 |
Manufacture of food products | 5.3025 | 5.9 | 3.8 | 1.6 | -1.7 |
Manufacture of beverages | 1.0354 | 11.5 | 19.9 | 5.1 | 3.7 |
Manufacture of tobacco products | 0.7985 | 8.7 | -0.6 | -8.3 | 1.0 |
Manufacture of textiles | 3.2913 | 29.3 | -8.7 | 0.1 | 0.8 |
Manufacture of wearing apparel | 1.3225 | 27.4 | -7.4 | -14.1 | 7.8 |
Manufacture of leather and related products | 0.5021 | 1.3 | -5.8 | -1.0 | -1.4 |
Manufacture of wood products | 0.1930 | 15.1 | -0.8 | -5.9 | 3.6 |
Manufacture of paper and paper products | 0.8724 | 17.7 | 0.6 | -3.6 | 0.4 |
Printing and reproduction of recorded media | 0.6798 | 12.4 | 23.4 | -1.4 | -5.2 |
Manufacture of coke and refined petroleum | 11.7749 | 8.9 | 5.7 | 3.9 | 3.1 |
Manufacture of chemicals and chemical products | 7.8730 | 4.3 | 6.9 | -1.5 | 2.3 |
Manufacture of pharmaceuticals | 4.9810 | 1.3 | -2.4 | 8.0 | 0.0 |
Manufacture of rubber and plastics products | 2.4222 | 8.0 | 0.5 | 4.4 | 4.9 |
Manufacture of other non-metallic mineral products | 4.0853 | 20.1 | 6.6 | 6.5 | 2.7 |
Manufacture of basic metals | 12.8043 | 18.6 | 8.1 | 11.6 | 6.4 |
Manufacture of fabricated metal products | 2.6549 | 10.9 | -1.6 | 8.3 | 7.2 |
Manufacture of computer, electronic and optical | 1.5704 | 11.1 | -6.4 | -11.3 | 8.3 |
Manufacture of electrical equipment | 2.9983 | 12.2 | -4.2 | 7.5 | 22.6 |
Manufacture of machinery and equipment | 4.7653 | 11.0 | 10.5 | 6.6 | 1.8 |
Manufacture of motor vehicles and trailers | 4.8573 | 18.4 | 19.3 | 11.6 | 3.9 |
Manufacture of other transport equipment | 1.7763 | 1.6 | 11.6 | 13.9 | 14.4 |
Manufacture of furniture | 0.1311 | 23.3 | 16.4 | -5.5 | 27.3 |
Other manufacturing | 0.9415 | 49.0 | -3.0 | -6.2 | -6.5 |
MINING | 14.3725 | 12.2 | 5.8 | 7.5 | 3.3 |
MANUFACTURING | 77.6332 | 11.8 | 4.7 | 5.5 | 4.1 |
ELECTRICITY | 7.9943 | 7.9 | 8.9 | 7.1 | 5.3 |
OVERALL IIP | 100.0000 | 11.4 | 5.2 | 5.9 | 4.1 |
Data Source: MOSPI (FY25 is 8-Months data)
What are the gaining and losing sectors on annualized IIP growth? Among the gaining sectors in IIP are furniture, electrical equipment, transport equipment, computers, wearing apparel, basic metals, and fabricated metal products. Among the sectors under pressure are other manufacturing, printing & recorded media, food products, and leather products.
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