The Central Statistics Office has put out the first set of data on factory output based on a reworked Index of Industrial Production (IIP). The new data gives hints on two important questions. Is industrial output slowing down? Have our companies gone slow on capex?
The answers are as follows. The new IIP— with a new base year and rejigged weights—shows that industry is indeed losing steam. In April, factory output was 6.3% higher than a year ago. That’s down from the 8.9% in March. Other data such as car sales and the Purchasing Managers’ Index tell the same sober story.
However, according to data on the so-called use-based classification, growth in capital goods production—a proxy for capex—was 14.5% in April, around one percentage point lower than in March, but far higher than the growth in production of consumer and intermediate goods. That is the good news.