ECONOMICS UPDATE

Scope for improvement

The IIP print for Jun-16 was in line with
expectations. Capital goods continued to decline,
eighth consecutive month of decline. However the
same was caused by statistical distortion due to the
outdated composition of database (anomalous
representation of rubber cables).A new series is
expected before the end of CY17.The consumer
goods segment showed signs of revival aided by
consumer durables and modest growth of non
durables (after seven months of decline) which
augurs well for the future. Going ahead, the
allocations for roads, railways and the power sector
in the Union Budget will boost industrial
production. The same (Govt spends) will be aided
by the fresh fall in crude triggered post Brexit. With
the onset of monsoons (currently above par), the
slack in the capacity utilisation will abate. On the
other hand, recovery in exports is challenging
owing to the global macro environment.
Sustenance of the trend (growth) is the key.

IIP for Jun-16 increased 2.1% vs. 4.2% YoY and

1.1% sequentially; in line with expectations

The rise was across the board led by electricity

and mining

Manufacturing grew by 0.9% vs. 5.2% YoY and

Romit Fernandes
romit.fernandes@hdfcsec.com
+91-99301-24556

0.6% sequentially on the back of basic goods

Within manufacturing, the growth was driven by

textiles, coke & refined petro and motor vehicles

16 AUG 2016

IIP
On the other hand capital goods contracted by

16.5% vs -2% YoY and -12.3% sequentially, this

was the eighth consecutive month of decline.
This was mainly on account of electrical
machinery (-46.1% vs -9.8% YoY and -41.1%
sequentially) which contains rubber cables.
Consumer goods registered a growth of 2.8% vs.
7.2% YoY and 1.1% sequentially, six month high,
caused by consumer durables (5% vs 16.1% YoY
and 6% sequentially)
Consumer non-durables grew after seven
consecutive months of contraction (1% vs. 2.3%
YoY and -2.3% sequentially) led by textiles.
Electricity surged to 8.3% vs. 1.2% YoY and 4.7%
sequentially
Mining activity rebounded to 4.7% vs. -0.4%YoY
and 1.4% sequentially.

IIP Snapshot
Mining
Manufacturing
Electricity
IIP
Basic goods
Capital Goods
Intermediate
goods
Consumer
goods
Durables
Non-durables
Source : CSO

Weight
(%)
14.2
75.5
10.3
100.0
45.7
8.8

Jun-16
4.7%
0.9%
8.3%
2.1%
5.9%
-16.5%

-0.4%
5.2%
1.2%
4.2%
5.1%
-2.0%

2.4%
-0.7%
9.0%
0.6%
4.8%
-18.0%

0.4%
3.7%
2.3%
3.3%
4.7%
2.0%

15.7

6.1%

1.3%

4.1%

1.6%

29.8

2.8%

7.2%

0.6%

2.5%

8.5
21.3

5.6%
1.0%

16.1%
2.3%

7.8%
-4.1%

3.7%
1.6%

Jun-15 3MFY17 3MFY16

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO> & Thomson Reuters

ECONOMICS UPDATE: IIP

Breakup of Manufacturing
Based on Use

Cons non-dur

Within manufacturing, the

growth was driven by textiles,
coke & refined petro and motor
vehicles

Intermediate

Basic

Capital goods contracted by

16.5% vs -2% YoY and -12.3%
sequentially, this was the
eighth consecutive month of
decline. This was mainly on
account of electrical machinery
(-46.1% vs -9.8% YoY and 41.1% sequentially) which
contains rubber cables.

Capital

Consumer Dur
Manufacturing
IIP
Source : CSO

Items
Food Products, Beverages
Tobacco
Textiles
Wearing Apparel; Dressing And Dyeing
Of Fur
Luggage, Handbags, Saddlery, Harness
& Footwear; Tanning And Dressing Of
Leather Products
Wood And Products Of Wood Cork
Except Furniture; Articles Of Straw &
Plating Materials
Paper And Paper Products
Publishing, Printing & Reproduction Of
Recorded Media
Coke, Refined Petroleum, Nuclear Fuel
Chemicals And Chemical Products
Rubber, Plastic Products
Other Non-metallic Minerals
Basic Metals
Fabricated Metal Products, Except
Machinery & Equipment
Machinery And Equipment
Office, Accounting & Computing
Machinery
Electrical Machinery & Apparatus
Radio, TV And Communication
Equipment
Medical, Precision & Optical
Instruments Watches And Clocks
Motor Vehicles, Trailers And SemiTrailers
Other Transport Equipment
Furniture; Manufacturing

Weight
7%
2%
6%

Jun-16
0.3%
3.5%
5.5%

May-16
-4.6%
-4.1%
4.5%

Jun-15
-7.5%
8.1%
2.1%

3MFY17
-11.1%
-5.4%
3.2%

3MFY16
-4.3%
-7.9%
1.8%

3%

5.8%

-1.2%

27.5%

1.9%

16.9%

1%

-13.8%

-7.6%

4.8%

-11.0%

3.5%

1%

1.4%

-6.5%

20.9%

-2.8%

12.3%

1%

3.9%

6.5%

6.1%

5.7%

3.3%

1%

0.2%

-0.7%

-11.5%

-4.4%

-5.0%

7%
10%
2%
4%
11%

7.6%
4.5%
3.9%
5.5%
4.3%

6.2%
3.1%
1.0%
0.8%
4.8%

8.9%
3.2%
0.4%
-0.2%
11.0%

10.0%
2.5%
1.6%
3.1%
2.7%

5.8%
4.8%
2.5%
-2.9%
9.4%

3%

8.3%

6.1%

1.3%

4.9%

-1.7%

4%

6.4%

14.8%

8.4%

9.2%

6.5%

0.3%

-0.8%

18.8%

16.4%

10.1%

-14.8%

2%

-46.1%

-41.1%

-9.8%

-48.0%

1.3%

1%

15.8%

5.8%

-1.8%

13.3%

-21.3%

1%

0.9%

10.1%

-7.1%

7.4%

-6.8%

4%

8.8%

5.1%

8.5%

6.8%

6.4%

2%
3%
75.5%
100%

8.7%
-9.0%
0.9%
2.1%

9.7%
-8.1%
0.7%
1.2%

0.9%
75.0%
5.2%
4.2%

8.6%
1.0%
-0.7%
0.6%

1.8%
27.5%
3.7%
3.3%
Page | 2

The rise was across the board

led by electricity and mining.

Growth driven by basic goods

12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%
-8.0%

Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16

12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
-6.0%

Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16

ECONOMICS UPDATE: IIP

Segment-wise Contribution To IIP

Mining

Contribution TO IIP (Based On Use)

Basic goods
Capital goods

Manufacturing
Electricity

Intermediate goods

IIP(General)

Source : CSO

Consumer goods
IIP(General)

Source: CSO

Page | 3

0.0%

-2.0%

-4.0%

-6.0%

-8.0%

Jun-16

Mar-16

-1.9%

2.7%

4.8%

10.6%

6.6%

5.2%

3.9%

5.1%

4.7%

Jun-16

Apr-16

Feb-16

Dec-15

Oct-15

Aug-15

Jun-15

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

Jun-14

Apr-14

Feb-14

Dec-13

Oct-13

General (Index) RHS

BJP forms Govt.

8.0%

6.0%

4.0%

2.0%

0.0%

-2.0%

-4.0%

0.9%

-2.9%
0.6%
-1.0%
0.6%
-3.7%

-4.6%

2.1%

2.7%

4.1%
3.4%

2.7%

5.9%

Manufacturing

Jan-16

Oct-15

Aug-15

-5.6%

-1.1%

2.9%

3.0%

Aug-13

Jun-13

Apr-13

Feb-13

Dec-12

Oct-12

Aug-12

IIP(3MMA)

May-15

Mar-15

Dec-14

Sep-14

Jul-14

-0.3%

-1.3%

0.3%

1.4%
-1.3%

3.0%

1.8%

4.3%

Jun-12

IIP(General)
Chidambaram takes over

Apr-14

-1.1%

-2.6%

-1.7%
-0.2%

-3.2%

Feb-14 -3.9%

Nov-13

Sep-13

Jun-13

Apr-13

2.0%

2.1%

12.0%

Apr-12

10.0%

2.7%

10.0%

9.9%

Feb-12

Dec-11

Oct-11

Aug-11

12.0%

-0.8%

-0.8%

Nov-12

2.4%

2.6%

Jun-11

Monthly Trend In IIP

Jan-13

0.0%
-1.6%

Aug-12

Jun-12

4.0%

-1.8%
-3.2%

6.0%

-3.6%

Apr-11

-6.0%

Mar-12

Manufacturing grew by 0.9%

vs. 5.2% YoY and 0.6%
sequentially on the back of
basic goods
4.1%

8.0%

1.1%

IIP for Jun-16 increased 2.1%

vs. 4.2% YoY and 1.1%
sequentially; in line with
expectations

Jan-12

ECONOMICS UPDATE: IIP

250.0

200.0

150.0

100.0

50.0

0.0

Source : CSO

Manufacturing

Source : CSO

Page | 4

Jun-16

Mar-16

Jan-16

Oct-15

0.7%

4.7%
8.3%

14.6%

11.8%
6.6%
9.6%

9.0%

Jun-16

Mar-16

Jan-16

Oct-15

Aug-15

May-15

Dec-14

Sep-14

Jul-14

Apr-14

6.0%

Electricity
Mar-15

11.4%

10.0%

13.7%

12.9%

15.7%

Source : CSO

5.9%

3.5%
5.6%
3.2%

1.2%

-0.5%

2.0%

3.3%

4.8%

3.9%

11.7%

11.9%

Feb-14

Nov-13

Sep-13

-3.4%

1.2%

3.6%

2.2%

1.7%
0.3%

1.4%

5.0%

4.7%

1.1%

5.3%

4.5%

2.8%

2.1%
1.3%
3.5%
1.5%

-0.4%

-0.6%

2.6%
2.7%
2.3%
0.5%
2.5%
1.7%
4.8%
0.1%
1.2%
0.1%
4.5%
-1.7%
4.0%
-1.8%
1.6%

-3.0%
-0.9%
-2.9%
1.6%

-5.9%
-4.6%

-7.7%

-0.2%
-1.8%
-2.1%

-3.1%

-0.3%

-0.7%
-1.1%

Mining

Aug-15

May-15

Mar-15

Dec-14

Sep-14

6.7%

11.5%

Electricity

Jul-14

Apr-14

7.5%

12.9%

20.0%

5.4%

6.5%

6.3%

7.2%

Jun-13

Apr-13

Jan-13

-5.5%

-3.5%

Mining

Feb-14

Nov-13

5.2%

6.2%

15.0%

1.3%

0.0%

4.2%

6.4%
3.5%

Nov-12

Aug-12

Jun-12

-1.1%

2.3%

6.0%

Sep-13

Jun-13

Apr-13

Jan-13

5.5%

3.9%

5.2%

2.4%

1.9%

8.8%

-8.0%

Nov-12

Aug-12

2.8%

-2.8%

-6.0%

-3.2%

-5.0%

Mar-12

0.0%

5.9%

-10.0%

-2.1%

2.0%

Jun-12

5.0%
4.6%

-4.0%

Jan-12

-2.0%

Mar-12

0.0%
8.0%

10.0%

3.2%

Electricity surged to 8.3% vs.

1.2% YoY and 4.7% sequentially
4.0%

2.7%

Mining activity rebounded to

4.7% vs. -0.4%YoY and 1.4%
sequentially

Jan-12

ECONOMICS UPDATE: IIP

Source : CSO

Page | 5

ECONOMICS UPDATE: IIP

IIP Trends Based On Use

30.0%

IIP(General)

Basic goods

Capital goods

20.0%

Capital goods contracted by

16.5% vs -2% YoY and -12.3%
sequentially, this was the
eighth consecutive month of
decline.

10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%

May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16

Consumer goods registered a

growth of 2.8% vs. 7.2% YoY
and 1.1% sequentially, six
month high, caused by
consumer durables (5% vs
16.1% YoY and 6% sequentially)

Source : CSO

Page | 6

ECONOMICS UPDATE: IIP

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