InvestorQ : How was the IIP number announced on Friday 10th September?
Dhwani Mehta made post

How was the IIP number announced on Friday 10th September?

Answer
image
Dilmini Mercia answered.
2 months ago
Follow

IIP growth for July came in 11.45% on a yoy basis and on a 2 year basis, the IIP is finally getting back to pre-COVID levels. However, the key thing to watch out for is what happens once the base effect fades from the month of August. That is when the real test of the IIP growth will come. On a pre-COVID basis, the mining sector and the electricity generation are decisively higher. However, manufacturing is still lagging the pre-COVID levels.

However, there are positive trends in terms of spread of sectors covered by IIP that are showing growth. For example, in Jul-21, a total of 20 out of 23 sub-sectors in the manufacturing space posted year-on-year growth. In June 2020, there were only 17 gaining sectors. Pharma continues to see contraction even as furniture and tobacco continued to lag. The good news is the growth in capital goods at 29.5% compared to 26.6% in Jun-21.

It does look like the IIP has got the better of pre-COVID after a gap of 2 years and the slack in manufacturing is more due to the COVID 2.0 lag effect. However, auto sector is hit by the shortage of microchips and that could hit output.

3 Views