The Index of Industrial Production (IIP) for April 2015 has something decent – with a 4.05% increase, which seems to finally be a good number. We have now had six continuous months of postive IIP growth which is the most since October 2011.
Components: Manufacturing Goes Up 5%
If you look at the components, the numbers have been hugely helped by Manufacturing (which forms 75% of the index).
Manufacturing is getting better, after a disastrous few years. Power production growth has dipped to zero, after many months of positive growth. Even mining has come down substantially.
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The Use Based Indexes show only one thing: the disaster that was Consumer Durables manufacturing has ebbed. But it still remains negative in terms of growth. (Click for a larger pic)
What’s doing well?
We have an interesting addition this month: which sector is doing well in terms of growth? YoY growth at a sector level of manufacturing:
While Garments and Chemicals – our favourite segments – continue to do well, we also see good growth in Machinery after a long time. And Electrical equipment too, though the growth was even more heady a few months back.
The biggest surprise is Tobacco with a -26.7% growth! Communication (mostly mobile phones now) and Office Equipment (mostly PCs) are understandable – we hardly manufacture those any more nowadays, and import much of it from abroad.
Our View: We finally have some good news. This might be a good thing if the news lasts till Monday. Main cues:
- Manufacturing is coming back, but it needs to do double digit growth.
- Mining should be helped once the coal mining pieces start again, though Electricity production is a concern.
- The sectors that should be looked at closely are Wood, Chemicals, Garments and Electrical equipment.
We hope this will last and that the data will not be revised lower.
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