SEPTEMBER IIP ROSE 9.1%
q The index of industrial production (IIP) for September 2009 rose 9.1% on
back strong growth in all the three major segments - manufacturing,
mining and electricity which grew at 9.3%, 8.6% and 7.9%, respectively.
q As per use-based classification, basic goods, capital goods and intermediate
goods delivered strong growth at 6.7%, 12.8% and 10.8%, respectively.
Consumer durables have also delivered strong growth in last
three months by growing more than 20% levels.
q Recovery in basic goods as well as intermediate goods indicates that
economic recovery is underway. We would be optimistically waiting for
more positive surprises in the future to get a clear signal about the pace
of recovery.
q Strong September 2009 number has come on the back of festive season
buying, continued stimulus measures, increase in purchasing power of
government staff due to release of wage arrears etc. We would be more
watchful on the future IIP numbers as the above mentioned effects
wear out.
q On policy front, we opine that, we need to see continued and sustained
trend in the economic indicators before RBI shifts its gear to tighter
monetary policy stance.
The CSO has released a quick estimate of index of industrial production (IIP) for
September 2009, which rose 9.1% on back strong growth in all the three major
segments - manufacturing, mining and electricity which grew at 9.3%, 8.6% and
7.9%, respectively. The strong IIP for September 2009 has come on the back of
festive season buying, continued stimulus measures, increase in purchasing power
of government staffs due to release of wage arrears etc.
The cumulative growth for the period April-September FY10 stands at 6.5% over
the corresponding period of the previous year.
Key highlights
n The manufacturing sector witnessed 9.3% growth during September 2009,
leading to 6.3% cumulative growth during April-September FY10 as compared
to 5.3% growth in April-September FY09.
n The mining sector rose 8.6% YoY during September 2009, leading to 8.2% cumulative
growth during April-September FY10 as compared to 3.8% growth in
April-September FY09.
n The electricity sector also delivered robust growth of 7.9% during September
2009 as compared to 4.4% during the same period last year. This segment continues
to show better performance and the cumulative growth during April-
September FY10 stands at 6.8% as compared to 2.5% growth in April-September
FY09.
n In terms of industries, 12 out of 17 industry groups in the manufacturing sector
have recorded positive growth during this month as compared to the corresponding
month of the last year.
n The industry groups that have shown the highest growth in this month are…
l Other Manufacturing Industries: 24.5%
l Basic chemicals & chemical products (except products of petroleum & coal):
20.1%
l Machinery and Equipment other than Transport Equipment: 16.5%
ECONOMY UPDATE
Saday Sinha
saday.sinha@kotak.com
+91 22 6621 6312
Kotak Securities - Private Client Research Please see the disclaimer on the last page For Private Circulation 3
MORNING INSIGHT November 13, 2009
n The sectoral growth (use-based classification) has been as under:
l Basic goods: 6.7% l Capital goods: 12.8%
l Intermediate goods: 10.8% l Consumer goods: 8.2%
n In September 09, consumer durables recorded strong growth of 22.2%
whereas consumer non-durables showed moderate growth of 2.6%.
n Apart from this, the IIP for August 2009 has been revised upward to 11.0%
from the previously reported growth of 10.4%.
