India’s industrial growth slowed in June 2024, as the Index of Industrial Production (IIP) registered a year-on-year (YoY) increase of 4.2%, marking a five-month low. This was a sharp decline from the 6.2% growth seen in May, driven largely by a slowdown in the manufacturing sector. Manufacturing growth dropped to 2.6% YoY, a seven-month low, down from 5% in the previous month.
The electricity sector also weakened, growing by 8.6% YoY compared to 13.7% in May. However, the mining sector provided some relief with a robust 10.3% YoY growth, an eight-month high, thanks to higher coal demand.
Sequentially, the IIP index and all key industrial sectors contracted, signaling a broad deceleration in industrial activity. Despite this, overall industrial performance in the first quarter of FY25 still surpassed that of the same period last year. In the manufacturing sector, 17 out of 23 industries, representing about 55% of the IIP, slowed down in June.
Notably, nine industries with a combined weight of -25% showed negative YoY growth, further dampening the overall manufacturing output. Yet, there were pockets of strength, with sectors like electronic and optical equipment (10.7% YoY), electrical equipment (28.4% YoY), and furniture (16% YoY) achieving double-digit growth, standing out amidst the broader slowdown.
The deceleration extended across most use-based categories in June. Consumer goods were hit hardest, with growth dropping 3.9 percentage points (pp) to 2.6% YoY, reflecting weakened demand for both consumer durables and non-durables. While consumer durable production grew by 8.6% YoY, non-durables contracted by 1.4% YoY, pointing to softness in both urban and rural consumption. The construction goods sector also slowed, with growth dipping by 1.9 pp. Other sectors, including primary goods, intermediate goods, and capital goods, experienced more moderate slowdowns, losing 1.0 pp, 0.8 pp, and 0.5 pp, respectively.
On a sequential basis, every category except capital goods witnessed declines, highlighting the broad-based nature of the slowdown. While industrial activity remains in an expansion phase, the weakening growth momentum, especially in consumer and construction-related sectors, suggests that challenges may lie ahead.
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