Factory output expected to contract by up to 1.5% in Jan: Dun & Bradstreet report

Subscribe to GoodReturns

Factory output expected to contract by up to 1.5% in Jan: Dun & Bradstreet repor
Slow growth in consumer goods and manufacturing sectors and higher interest rates are likely to keep pressure on factory output, which is likely to contract by up to 1.5 per cent in January, according to a Dun & Bradstreet report, said the PTI.

"The sustained decline in the consumer goods sector along with dismal performance of the overall manufacturing sector and soaring interest rates are likely to keep the index of industrial production (IIP) growth restrained going ahead," research firm said in a report yesterday.

D&B sees January IIP to decline by 0.5-1.5 per cent. Last month the factory output, as measured in terms of the index of industrial production (IIP), had contracted by 0.6 per cent.

"The economy is facing its worst downturn with IIP contracting for the third consecutive month in December, highlighting sustained sluggishness in demand conditions and downturn in investment activity.

"Even as cyclical headwinds have eased of late, mainly on the external front, the domestic macro-environment remains challenging given rising interest rates, elevated inflation and weak consumption demand," agency said.

The report said although inflation in food and primary articles has moderated in the last few months on account of seasonal factors, elevated fuel prices and weak rupee are an area of concern.

Given the cut back on government spending, tight liquidity condition and higher policy rates, both short-term and long-term yields are likely to remain elevated, the report said.

Dion Global Solutions Ltd.

Story first published: Thursday, February 20, 2014, 9:10 [IST]
Please Wait while comments are loading...
Company Search
Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

Thousands of Goodreturn readers receive our evening newsletter.
Have you subscribed?