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Factory Output Data Augurs Well for Economy: Experts

12 June, 2015 1:13 PM
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Factory Output Data Augurs Well for Economy: Experts

Mumbai: India's consumer price inflation edged up to 5.01 per cent in May, while annual industrial output growth accelerated to a two-month high of 4.1 per cent in April, government data showed on Friday.

"Both the IIP (industrial output) and CPI data augur well for the economy.

"The higher-than-expected IIP data corroborates with the solid indirect tax growth figures released by the Finance Ministry.

"The CPI data is better than what we expected. The last two readings have shown that food prices are not flaring up despite adverse weather conditions. This bodes well given the outlook for uneven monsoon distribution.

"Should CPI and food inflation continue to behave on similar lines January 2016 inflation may undershoot RBI's 6 per cent estimate.

"While we still do not expect RBI to cut rates anytime soon, this data has increased the odds for a rate move later in the calendar year."

"Certainly the growth numbers is substantially better than market expectations.

"Also what we see is over the last three months the seasonally adjusted growth in industrial production indicates a significant pick-up in economic activity. That is consistent with other indicators which show that there is some pick-up in growth.

"Despite the concerns about monsoon, we think that as long as increases in the minimum support prices are kept to a minimum we don't see any significant food inflation."

"The headline (inflation) numbers allays concern around the build up of price pressures, particularly in food inflation.

"The pick up in core inflation, as we calculate it, is largely attributable to the pick-up in transport and communication, which was expected.

"The near-term concerns on price pressures remain as the monsoon unfolds. However, we continue to believe even if there is any upside pressure on inflation it is likely to dissipate over the course of the year due to weak demand.

"We don't rule out further policy easing by the central bank especially in August once the clearer picture of monsoon is apparent."

"In both cases the numbers have come better than expected, especially IIP (industrial output). We are seeing manufacturing growth picking up for the past four months and past numbers are getting revised upwards.

"A broader trend of a slow recovery is coming out. On inflation side likely insufficient monsoon remains an issue. We don't expect any rate cuts for the current year at least."

"The IIP numbers are completely out of sync with the story conveyed by most of the leading indicators. Its sustainability no one can predict.

"On-the-ground channels suggest recovery is not as robust as suggested by this data.

"For monsoon it's too early to attach too much weight. What really matters is the temporal and geographic distribution of rainfall. But RBI will remain cautious."

"The IIP data although volatile, has been reflecting a recovery in Indian industrial activity. Since April 2014, IIP growth was negative only once, compared to 6 times in FY 2013-14. This signals towards a healing process within the Indian economy.

"However, inflation has been sticky, making it difficult to pre-empt the monetary policy's stance on rates."

Source: profit.ndtv.com

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