IIP Jun-14 (Are consumers shying away from markets ???)

1. IIP for Jun-14 came at 3.4%, which does not indicate healthy recovery in growth momentum of Indian Economy, which most of us believe that is on its way.
2. I personally believe that, If we see IIP growth of more than 5% consequently for few months, we can say that our economy’s growth engine has finally started once again.
3. Consumer goods segment is this month’s dragger. At the same time Capital goods segment posted impressive growth of 23%.
4. To get rid of seasonality impact, low / high base effect and such other issues, I prefer to look at 12 Month Moving Average (12MMA) YoY growth, where we can more easily analyze the trend.
5. Accordingly one may conclude that, i) Manufacturing activities (accounts 76% of IIP) haven’t kicked. ii) Its only because of Mining and Electricity that General IIP (12MMA) growth is 1.6%. iii) Consumer goods, which accounts for 30% of IIP has 12 MMA growth of -3.1%, corresponding number for Jun-13 works out to be -0.13%. Are consumers shying away from markets ???

To enable you to dissect more on this, I have placed an Excel “IIP_and_its_constitutents_(Series 2004-05)” which you can use.

IIP and its Break-down across various categories (Monthly)
						YoY Growth (%) for the month
	Category			Weight (%)		Jun-14	May-14	Jun-13
1	Manufacturing				75.5	1.8	5.1	-1.7
2	Mining & Quarrying				14.2	4.3	2.9	-4.6
3	Electricity				10.3	15.7	6.7	0.0
	General IIP				100.0	3.4	5.0	-1.8
	Use based Categories
1	Basic Goods				45.7	9.0	6.4	-1.9
2	Capital Goods				8.8	23.0	4.3	-6.6
3	Intermediate Goods				15.7	2.7	3.2	1.3
4	Consumer Goods				29.8	-10.0	4.2	-1.5
4.1	Consumer Durables			8.5		-23.4	3.4	-10.1
4.2	Consumer Non-durables			21.4		0.1	4.8	6.2

12 Month Moving Average (MMA)
						YoY Growth (%) for 12 MMA
	Category			Weight (%)		Jun-14	May-14	Jun-13
1	Manufacturing				75.5	0.6	0.1	1.1
2	Mining & Quarrying				14.2	2.5	2.2	-4.2
3	Electricity				10.3	9.5	8.1	2.9
	General IIP				100.0	1.6	1.1	0.7
	Use based Categories
1	Basic Goods				45.7	5.7	4.7	0.8
2	Capital Goods				8.8	-0.6	-4.3	1.5
3	Intermediate Goods				15.7	3.1	3.5	1.6
4	Consumer Goods				29.8	-3.1	-2.3	-0.2
4.1	Consumer Durables			8.5		-9.8	-8.7	-7.8
4.2	Consumer Non-durables			21.4		1.7	2.1	6.0

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