Core sector growth eases marginally to 8% in July

economictimes.indiatimes.com:

core sector registered an 8% growth in July, compared with 8.3% in the previous month, as all eight sectors recorded a positive growth for the first time in 14 months, according to data released Friday.

While the continuation of government capex (both centre and states) in July led to a strong performance in steel and cement sectors, economists noted that the growth in cement and electricity sector, despite seasonal rains, indicated a progression of economic activity.

“Overall, the recovery in the infrastructure industries appears to be ticking off on a pervasive note which bodes well for the private sector capex cycle which Ind-Ra believes is at the cusp of a pickup,” said Paras Jasrai and Sunil K Sinha, economists at Ind-Ra.

On Friday, another data released by the government showed GDP growth rising to a four-quarter high of 7.8% on the back of rising consumption and sustained capex.

Economists pointed out that a private capex revival was necessary for India to sustain growth momentum.

India’s economic growth rises to a four-quarter high of 7.8% in Q1

Although infrastructure sector has been performing well, consumer-related sectors are yet to show signs of recovery. Despite, a high growth in core output, industrial growth eased to a three-month low of 3.7% in June.

However, economists say that the strength in index of eight core industries, which constitutes 40% of the index of industrial production, is likely to translate into better IIP growth in July.

“Based on these numbers, the IIP growth rate would be in the range of 5-6% for July,” said Madan Sabnavis, chief economist, Bank of Baroda.
They further point that core output is likely to stay elevated in August as well.

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