India Factory Output Contracts at Milder Pace in July

India’s factory output contracted for a fifth straight month, albeit at a milder pace as activity continued to improve amid the economy reopening.

The Index of Industrial Production fell 10.4% in July, data released by the Ministry of Statistics showed Friday. The decline is shallower than June’s revised contraction of 15.8%, and compares with an estimate for an 11.8% fall in a Bloomberg survey of 33 economists.

Key Insights

  • Manufacturing output declined 11.1% from a year ago, while capital goods production dropped 22.8%. Electricity output fell 2.5%, and mining production declined 13%
  • India’s gross domestic product had its worst slump in the June quarter when a nationwide lockdown brought economic activity to a halt. The weakness may continue during the rest of the year, with Goldman Sachs Group Inc. forecasting GDP to shrink 11.1% this year
  • Calls are growing for more fiscal support amid signs of uneven recovery and disruptions caused by lockdowns imposed by various states to control the coronavirus pandemic

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