Headline : Industrial output shrinks for first time in nearly 2 yrs
- According to the recent data released by the Central Statistics Office (CSO), industrial output contracted (fell 0.1%) in March 2019, the first time in nearly two years.
About Central Statistics Office (CSO):
- The CSO is a governmental agency under the Ministry of Statistics and Programme Implementation.
- It coordinates the statistical activities in the country and evolves statistical standards.
CSO’s divisions and various functions:
- National Accounts Division: This division is responsible for:
- Preparation of National Accounts which includes GDP, government and final consumption expenditure, fixed capital formation and other macro-economic aggregates
- Bringing out annual publication titled ‘National Accounts Statsitics’ (NAS).
- Social Statistic Division: This division is responsible for monitoring of Millennium Development Goals, grant-in-aids research etc.
- Economic Statistic Division: This division is responsible for:
- Conducting Economic Censuses and Annual Survey of Industries
- Compiles All India Index of Industrial Production (IIP)
- Compiles Energy Statistics and Infrastructure Statistics
- Develops classifications like National Industrial Classification (NIC) and National Product Classification (NPC).
Indices complied by CSO:
- Index of Industrial Production
- Consumer Price Index
- The manufacturing sector, which accounts for over 77% of the index of industrial production (IIP), contracted 0.4% during March 2019, which is a major reason for negative Industrial output growth.
- The CSO has estimated GDP growth for 2018-19 at 7%.
- The latest purchasing manager’s index (PMI) also showed slow down in factory activity to an eight-month low in April 2019.
Reasons for slowdown:
- Tepid Consumer goods growth (both durable and non-durable)
- Slowdown in Capital Goods Sector
- Decrease in Private investment.
- Subdued Consumer Spending
About Purchasing Manager’s Index (PMI)
- PMI or a Purchasing Managers’ Index (PMI) is an indicator of business activity both in the manufacturing and services sectors.
- For India, the PMI Data is published by Japanese firm Nikkei but compiled and constructed by Markit Economics.
- It is a survey-based measure which receives the inputs from the respondents about changes in their perception of some key business variables from the month before.
- It is calculated separately for the manufacturing and services sectors and then a composite index is constructed.
- The PMI is usually released at the start of the month, much before most of the official data on industrial output, manufacturing and GDP growth becomes available.
- It is, therefore, considered a good leading indicator of economic activity.
- Note: Manufacturing growth measured by PMI is considered good indicator of industrial output.