Mixed signals from economic data

The eight core industries, with about 38 per cent weight in the index of industrial production (IIP), grew 6.4 per cent in March, the highest in 16 months. The cumulative growth for the entire fiscal 2015-16, however, was lower, at 2.7 per cent, according to an official press release.

The eight infrastructure sectors are coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity. The impressive growth in March is the result of a spurt in cement, electricity, fertilizers, and refinery products. The fact that the March numbers are in improvement over a decent expansion in February, 5.7 per cent, would have delighted many but the Nikkei Manufacturing Purchasing Managers’ Index (PMI) in April has dipped. The PMI dipped to 50.5 in April from 52.4 in March. Below 50 means contraction.

“PMI data indicated that Indian manufacturers raised output at a slower pace in April as new business inflows were broadly unchanged during the month,” according to a statement from Nikkei. “The upturn in new export orders was sustained, although growth was at a six-month low.”

Among infrastructure industries, the fertilizer sector grew the fastest, expanding 23 per cent in March, an improvement upon 16.3 per cent in February. Cement also rose sharply by 11.9 per cent but it was lower the 13.5 per cent rise in February. Electricity registered a growth of 11.3 per cent in March, up from 9.2 per cent in February.

Coal, at 1.7 per cent, saw a slowdown in March; in February, growth was 3.8 per cent. Crude oil sector contracted by 5.1 per cent in March; in the previous month it grew at 0.8 per cent.