IIP for May 2016 At A Boring 1.2%. Is IIP Even Relevant Now?

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The Index of Industrial Production (IIP) for May 2016 grew at 1.2% over the previous year. 

IIP

This isn’t a big deal, and the April IIP number has been revised downwards to -1.35% (from the first reported -0.84%). 

Components: Nothing To Write Home About

Manufacturing grew at 0.7% and Mining and electricity have come off their high growth months.

IIP Components

Things don’t look that great at the IIP use-case level too. Capital goods production is contracting, as is non-durables (FMCG). The rest aren’t making big noises either. 

IIP By Use

Our View: IIP isn’t a great measure of anything anymore, but it’s all we have in terms of production information. More of India is services than manufacturing and we need a similar index at the services level to understand if things are indeed going well or slowing down. But hey, when we have data, we have to display it – and graphs speak better than words. 

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