October IIP figures

Data released by the Central Statistics Office (CSO) showed that industrial output had risen unexpectedly by 8.2% in October compared to a decline of 5% in the same month a year earlier. The CSO revised the September data to show a decline of 0.7% from the previous reading of a 0.4% fall.
Economists said the sudden surge was largely due to a statistical base effect and improvement in segments such as capital goods, consumer durables and non-durables.
But economists said it was early to say if the growth can be sustained.
Industrial output data has remained volatile for several months, particularly the capital goods segment, making it difficult to spot a trend. The industrial sector has also been hit hard by high interest rates, input costs and slowdown in demand. The manufacturing sector, which accounts for nearly 75% of the index of industrial production, rose 9.6% in October compared to a 6% decline in the same year-ago period. The improvement in the manufacturing sector is in line with other data such as the purchasing managers’ index which has shown a rebound in the segment thanks to new orders.
The data showed that consumer goods, durables and non-durables also staged a smart rebound with all the segments posting double-digit expansion. The capital goods sector, which is a key gauge of economic activity, rose 7.5% in October compared to a fall of 26.5% in the year-ago period. This is the first time since April that the data for this segment has moved to positive territory.
The factory output data to some extent dashes hopes of an immediate interest rate cut as RBI would want to wait and see whether this is a sustained recovery.