IIP growth slows to 6-month low of 2.9% in February on weak manufacturing

February industrial output: January marked an eight-month high at 5% driven by an upswing in the critical manufacturing sector

India’s industrial output, measured by the Index of Industrial Production (IIP), dropped to 2.9 per cent in February after a strong start at 5.01 per cent in January, according to data released from the National Statistics Office (NSO) on Friday. Economists polled by Reuters had expected a growth of 4 per cent, while Bloomberg had estimated 3.6 per cent growth.

 

This marks the lowest level in six months, since August 2024, when IIP contracted by 0.1 per cent.

Sector-wise performance

Manufacturing, which has the highest weight in the IIP, recorded 2.9 per cent growth, compared to 5.5 per cent in January.

 

Mining grew only 1.6 per cent, showing weakness in output from extractive industries. The previous month it had grown by 4.4 per cent.

 

Although electricity grew by 3.6 per cent, compared to 2.4 per cent in the month prior, it was not strong enough to offset the softness in the other two sectors.

 

The manufacturing sector saw positive growth in 14 of the 23 industry groups classified under the National Industrial Classification (NIC) at the two-digit level. The strongest performing sub-sectors included:

 

Basic metals: Growth of 5.8 per cent, driven by higher production of alloy steel flat products, steel pipes and tubes, and mild steel bars and rods.

 

Motor vehicles, trailers, and semi-trailers: Growth of 8.9 per cent, supported by increased production of auto components, axles, and commercial vehicles.

 

Non-metallic mineral products: Growth of 8.0 per cent, led by cement, cement clinkers, and prefabricated concrete blocks.