Refinery products decelerate January core factory output to 19-month low

Contraction in output of refinery products hugely decelerated the output pace of India's eight major industries in January to a 19 months low of 1.8 per cent, official data showed on Thursday.

According to the data from the Ministry of Commerce and Industry, the Index of Eight Core Industries (ECI) had risen by 6.2 per cent during the same period last year.

On a sequential basis, the index rose by 2.7 per cent in December 2018.

The index carries 40.27 per cent weight of the items included in the Index of Industrial Production (IIP).

"The combined Index of Eight Core Industries stood at 134.8 in January 2019, which was 1.8 per cent higher as compared to the index of January 2018. Its cumulative growth during April to January in 2018-19 was 4.5 per cent," the Ministry said in a statement.

On sector-specific basis, the output of refinery products, which has the highest weightage of 28.03, declined (-)2.6 per cent in January 2019 compared to the corresponding month of the last fiscal.

Similarly, electricity generation, which has the second highest weightage of 19.85, inched lower by (-) 0.4 per cent.

However, Steel production, the third most important component with weightage of 17.92, was up by 8.2 per cent during the month under review, whereas coal mining, with a 10.33 weightage, inched-up 1.7 per cent.

On the other hand, extraction of crude oil, which has an 8.98 weightage, declined by (-)4.3 per cent during the month under consideration.

The sub-index for natural gas output, with a weightage of 6.88, edged-higher by 6.2 per cent.

Cement production, which has a weightage of 5.37, rose by 11 per cent in the month under review.

Fertiliser manufacturing, which has the least weightage -- only 2.63 -- rose by 10.5 per cent last month.

"Eight core infrastructure industries growth in January 2019 declined to 19 months low at 1.8 per cent," said Devendra Kumar Pant, Chief Economist, India Ratings and Research (Fitch Group).

"Top two contributors to core sector - refinery products and electricity - contracted in January 2019. Cement, fertiliser, steel and natural gas provided support to growth."

"Declining trend in core sector growth from October 2018 suggests continued weakness in industrial activities and a weak second half economic growth. Expect a low industrial growth in the month of January 2019."

--IANS

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