IIP Growth Likely to Moderate in February: Experts

Bangalore:"Notwithstanding the improvement in core sector growth, IIP growth is expected to decelerate to around 4.2 percent in February from the 6.8 percent reading in the previous month. A lower PMI and easing export growth in the month point towards a moderation of manufacturing growth," ICRA economist Aditi Nayar said. New Delhi: The country's industrial output growth in February is expected to fall below 6.8 percent recorded in January even though there are some signs of pick-up in manufacturing and consumer goods, reports PTI. "As far as the IIP growth is concerned, it will remain flat in February this year and our projection is about 6.14 percent for the month. Though, this is little less than the previous month, it is still a good number," Bank of Baroda chief economist Rupa Rege-Nitsure told PTI. The IIP for the month of February is scheduled to be released on Thursday. Growth in factory output growth, as measured by the Index of Industrial Production (IIP), grew 6.8 percent in January 2012, over the previous month, mainly due to improvement in the manufacturing sector. It was, however, higher at 7.5 percent in January 2011. "We have seen stronger activities in some core sectors (in February) like manufacturing and consumer goods in which the growth is likely to improve and touch more or less the same number," Ms Rege-Nitsure added. IIP growth has been revised upwards to 2.5 percent in December, from the provisional estimates of 1.8 percent. However, DK Joshi, chief economist, Crisil said, "It is difficult to predict at this moment. However, there could a moderation in growth in some of the sectors." Echoing similar views, ICRA economist Aditi Nayar is of the view that the IIP growth could further decelerate to 4.2 percent. "Notwithstanding the improvement in core sector growth, IIP growth is expected to decelerate to around 4.2 percent in February from the initial 6.8 percent reading in the previous month. A lower PMI (Purchasing Managers Index) and easing export growth in the month point towards a moderation of manufacturing growth," she said. According to the data released last month, output of the manufacturing sector, which constitutes over 75 percent of the index, rose 8.5 percent in January, compared to 8.1 percent in the same month last year. During the April-January period of 2011-12, the IIP growth stood at 4 percent, as against 8.3 percent in same period in 2010-11.