Manufacturing sector may record subdued growth in Q3: Ficci

Industrial growth slowed to 2.7% in August due to poor show by the manufacturing sector and contraction in capital goods output

Key manufacturing segments such as automotive, capital goods and chemicals are expected to register a subdued growth in the October-December quarter due to high interest rates and inflation, a survey said today.

In its quarterly survey on manufacturing, industry body Ficci has projected a modest recovery in the growth of the manufacturing sector during the October-December quarter.

"Most of the important sectors like automotive, capital goods, metals and chemicals continue to expect subdued growth in the third quarter," it said in a statement.

Industrial growth slowed to 2.7 per cent in August due to poor show by the manufacturing sector and contraction in capital goods output.

The survey, which drew responses from 364 manufacturing units, said that modest recovery is expected as demand conditions reflected in order books show a marginal improvement.

Except a few sectors like leather where majority of the firms plan to add new capacities, in other segments only few companies have plans to add new add capacity, it said adding "this indicates that investment will not pick-up at least in next two to three months".

The survey also said that sectors like chemicals, textiles, auto and machine tools were likely to witness low (less than 5 per cent) growth and four sectors - FMCG, capital goods, cement and leather - may witness moderate growth (between 5 per cent and 10 per cent) in the third quarter of 2012-13.

Sectors such as tyre, ceramics and electronics are likely to witness strong growth of more than 10 per cent during the period.

About 70 per cent of the respondents said they do not expect to hire new workforce in next three months.

However, it said that some recovery is expected as overall business environment has improved with announcement of number of reform measures by the government like allowing FDI in retail, aviation and power exchanges.