By Premium Bureau

Index for Industrial Production (IIP) for May 2015 grew at only 2.7% as compared to May 2014, which on a sequential basis is lower than April 2015’s 4.1% growth. Thus, this sharp slippage, on a MoM basis, is a big negative. The cumulative growth for April-May 2015-16 over the corresponding period of the previous year now stands at 3.0%.

Digging deeper, in terms of sectors, Mining, Manufacturing and Electricity grew by 2.8%, 2.2% and 6.0% respectively in May 2015 as compared to May 2014. Cumulative growth in the three sectors during April-May 2015-16 over the corresponding period of 2014-15 has been 1.5%, 3.2% and 2.8% respectively. Thus, manufacturing, which also has the highest weightage of over 75% in the overall IIP index, has performed very poorly during May 2015, in comparison to April 2015. Electricity, however, showed maximum growth, at 195, up from 177 in April 2015 and 184 in May 2014.

In terms of industries, 12 out of the 22 industry groups in the manufacturing sector have shown positive growth during May 2015, such as wearing apparel, dressing and dyeing of fur growing at 15.8%, followed by 11.2% growth in furniture and 11.1% in coke, refined petroleum products and nuclear fuel. The disappointment came in from radio, TV and communication equipment and apparatus posting the highest negative growth of 24.3%, followed by negative de-growth of 18.9% in office, accounting and computing machinery.

As per use-based classification, the YoY growth rates in May 2015 are 6.4% in Basic goods, 1.8% in Capital goods and 1.2% in Intermediate goods. Thus, capital goods needs a strong push to get back going. Consumer durables, which has so far fared well, recorded negative growth of 3.9% in May 2015, with overall growth in Consumer goods being negative 1.6%. Thus, the fear of consumer sentiment being on shaky ground has been proved correct.

Some of the important items showing high positive growth during May 2015 over the same month last year include H R Sheets (242.9%), Conductor, Aluminium (156.9%), Lubricating oil (123.7%), Copper (86.8%), Wood furniture (64.1%), Vitamins (34.5%), Tea (29.2%) and Carbon Steel (22.0%).

Some of the important items showing high negative growth were Woollen Carpets (-) 43.7%, Grinding Wheels (-) 42.9%, Viscose staple fibre raw (-) 41.2%, Ayurvedic Medicaments (-) 34.5%, Aerated Waters and Soft Drinks (-) 31.6%, Fruit Pulp (-) 29.9%, Telephone Instruments (including mobile phones and accessories) (-) 29.4% and Tractors (-) 27.2%.

This is clearly not what the market was hoping for. Unless there is any positive news flow over the weekend, market will give a thumps-down reaction to this data released by the Central Statistics Office, on Monday. No major result announcements are also lined up over the next 2 days.