Macro Economic Data
Context:
- Despite an increase in manufacturing, inflation is still a concern.
Index of Industrial Production:
- It is an indicator that monitors changes in the volume of manufactured goods produced over a given time frame.
- IIP is created and distributed monthly by the Central Statistical Organization (CSO), Ministry of Statistics, and Programme Implementation.
It measures the growth of the following industry groupings as a composite indicator:
- Electricity, manufacturing, and mining are three major industries.
- Three use-based sectors include basic products, capital goods, and intermediate goods.
- The base period for IIP is from 2011 to 2012.
Eight major sectors:
- Eight main industries account for 40.27% of the weight of the elements that make up the Index of Industrial Production. (IIP).
- In decreasing order of weight, the following eight core sector industries are listed: Crude oil, natural gas, steel, electricity, coal, cement, and fertilisers are examples of refinery products.
Current macroeconomic data:
- Preliminary figures from the government show that in November, output in the major industries—from coal to electricity—grew by an average of 5.4% year over year.
- The index increased as a result of double-digit growth in the following industries: cement, coal, energy, and steel. Although six of the eight sectors had contractions, including the two heavyweight sectors of power and refinery products, which together make up roughly half of the index, the average core output remained steady sequentially.
- While power output decreased 2.1% from October, refinery products dipped 3.1% sequentially.
Positives:
- Cement consumption is encouraging and, if it keeps increasing, could boost the expansion of the entire economy. Cement is an essential building component that cuts across the employment-intensive housing and infrastructure sectors.
- The 12.3% annual and 15.1% sequential increases in coal output are also positive news because they demonstrate that there is now more fuel available to power captive power plants and furnaces in the crucial process and metal-making industries.
- According to the current PMI data, the manufacturing sector’s momentum dramatically increased in December as businesses reported the largest growth in new orders since February 2021.
- According to a confidential survey of purchasing managers at over 400 manufacturers, these companies’ average output growth hit a 13-month high last month. The PMI figure of 57.8 represented the industry’s strongest gain since October 2020.
- – Manufacturers of goods upped their hiring to help them deal with a backlog of orders. Additionally, even though the rate of job growth was the slowest since September, employment as a whole climbed for a tenth straight month, indicating greater optimism among manufacturers.
Moving ahead:
- Manufacturers reported that for the first time in almost two and a half years, selling price rises have exceeded increases in input costs, which is consistent with the PMI survey’s finding that the private sector’s overall output charge inflation has accelerated. Policymakers cannot afford to relax their standards when it comes to inflation at this moment.
