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Economy

IIP for Oct 2014 at Three Year Low, at -4.2%

The Index of Industrial Production (IIP) went to the lowest growth seen since October 2011, with a -4.25% number. There might be an element of seasonality here as this year, Diwali was in October while last year, it was in November. (Diwali’s the month when, usually, IIP goes down.But this year has been more than others)

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The last time IIP dropped so much was again a Diwali month, (Oct 2011) after which the next month was awesome (6%!).

From a sector perspective:

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The worst performer was manufacturing (which has the highest weight in the index).

The official press release says the worst performers were:

  • Mobile phones (-78%)
  • Gems and jewellery (-50%)
  • Heat Exchangers (-44%)

Of these, the Mobile phone bit might be explained by the fact that Nokia’s plant shut down in October. However, even if you retain same production levels as September, the IIP would have fallen by 3.2%, still a very high number.

Oh, and the use based indexes.

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Consumer durables, at -35% is the worst hit, but intermediate goods too, have slowed.

This is not a good number. It was released post market hours so we will know market impact only on Monday.

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