Diving deeply into the Index of Industrial Production (IIP) in October 2014 , and the large drop gives us a few insights. The biggest negative contributor to IIP was “communications equipment” which is amplified due to a base effect. Its contribution to IIP will be more muted next month. Even if you disregard that bit, IIP growth was negative. First time in seven months! The Diwali effect being in different months in the last two years means our October Data is off base. November data will therefore look good anyhow. Even after all this, the data is the worst since April 2014 That Big Fat Contributor How did we get the -4.26% number on IIP we saw in October 2014? Looking at the numbers and taking the internal numbers of the components of manufacturing (which forms 75% of the weight of the IIP) we can see the buildup: The biggest drop was in “Communication Equipment”. This seems to have been explained by the shutdown of the Nokia factory in October.… (Read On…)
[via Capital Mind]
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