Where did the Electricity go?

I have always found it difficult to understand the IIP nos. Every month, i try to pour into the details of the nos to make sense out of them, yet i find it difficult to do so. One big example is simply the figures for Electricity. Broadly, the IIP is divided into three sectors, Mining, Manufacturing and Electricity. Now consider this..

Comparing August with June this year. Mining in August stood at 181.1 vs 181.3 in June, whereas Manufacturing in August stood at 313 vs 313.1. Both slightly lower as compared to two months earlier. Yet look at Electricity. It stands at 245.1 vs 234.4 in June, a good 4.5% jump. That should be good news but a question is where did this electricity go? If mining and manufacturing both were very slightly down, surely the 4.5% jump in Electricity should have eased the residential shortage. Did you notice fewer power cuts in August?

Now lets compare March with August. The figures for March were; Mining 209.8, Manufacturing 326.9. Both much higher than the figure for August. You bet Electricity must have been much higher than 245.1 in August! Did you bet? If you did, you have lost it. For Electricity in March was 241.3.

Ah! now, this is interesting. If with almost 1.5% less Electricity, we could mine and manufacture much more, it surely means that the much better performance in August on the Electricity front, must have meant much improved household supply (surely we needed less than 241.3 in August for the industrial production). If we did not notice much lower power cuts, then where did Electricity go? Any answers?

IIP Growth in June 2009

The IIP index for the month of June 2009 stands at 290.2. This is an advance estimate subject to two revisions. When compared to last year, this amounts to a 7.8% jump, but compared to the previous month is a lesser 3.4% jump.

Yet, if this figure does not get revised seriously downwards and the index sustains and grows in the coming months, it does represent a possible positive for the economy. But as of now i remain a little skeptical. Lets examine why..

The figures for IIP for the last 15 months are given below. Note that figures are revised twice, so figures upto April 2009 are final. The figures of May and June are subject to revision.

A line chart followed by the detailed table are below:

(Click on the images to get a sharper view)

Note that the spike in March 2009 seems to be an outlier. In March 2009, electricity, mining and manufacturing all spiked up. Mining has clearly not sustained its spike after March. The interesting thing is that the advance figures for manufacturing in June 2009 show another spike but electricity dips. How is that possible? Does it mean that we have used less electricity for manufacturing more? Note mining has risen ever so slightly in June 2009. So what is the explanation?

I for one would wait to see if this "stupendous" performance repeats itself in the coming months. I would also wait to see if the figures for June 2009 get revised downwards (two revisions are forthcoming). Only then will i jump to conclusion that there has been an improvement in the IIP.

IIP Growth in April 2009 1.4% over April 2008

The details of the IIP nos (from the press release of the govt) makes an interesting study.

A quick review tells us the following .

1. Eleven out of seventeen industry groups showed a positive growth. Seems good so far.

2. The industry group ‘Wood and Wood Products; Furniture and Fixtures’ have shown the highest growth of 31.4%, followed by 12.6% in ‘Wool, Silk and Man-made Fibre Textiles’ and 10.2% in ‘Non-Metallic Mineral Products ’. Furniture and Fixtures with the highest growth. Should that enthuse us?

3.On the other hand, the industry group ‘Food Products’ have shown a negative growth of 34.4% followed by 12.4% in ‘Leather and Leather & Fur Products‘ and 5.1% in ‘Other Manufacturing Industries’.

4. As per Use-based classification, the Sectoral growth rates in April 2009 over April 2008 are 4.6% in Basic goods, (-)1.3% in Capital goods and 7.1% in Intermediate goods. The Consumer durables and Consumer non-durables have recorded growth of 16.9% and (-)10.4% respectively, with the overall growth in Consumer goods being (-)4.7%.Negative growth in capital goods is a pointer to industry confidence. Growth in intermediate goods does not tell us story till it is clear for which products these intermediate goods are used. Growth in consumer durables may be seen as encouraging.

5. Alongwith the Quick Estimates of IIP for April 2009, the indices for March 2009 have undergone the first revision and those for January 2009 have undergone the second (final) revision in the light of the updated data received from the source agencies. (It may be noted that revised indices (first revision) in respect of February 2009 have already been released in May 2009 and these indices shall undergo final (second) revision in July 2009). This is the best part of it. So the final figures for April 2009, shall not be known till August 2009. How much would it differ from the quick estimates is anybody's guess.

Now for a comparison with the previous months.

1. The general index is at 270.1 for April 2009, down from 302.6 for March 2009. Of course, the figure for March 2009 will only be finalised next month, so its prudent to compare with earlier months.

2. The general index stood at 274.2 in Feb 2009 (higher than April 2009), 284.8 in Jan 2009 (higher than April 2009), 284 in Dec 2008 (higher than April 2009) and 267.6 in Nov 2008 (marginally lower than April 2009). In short, April 2009 figures indicate a contraction with respect to the previous quarter.

3. The index is lower in April 2009 as compared to May 2008 (274.6) too. So we may see negative nos in May 2009, until and unless there is real growth soon.

4. In the latter half of 2008, the index fell to 262.9 in Oct 2008. So in Oct 2009, expect positive growth in nos. even if there is stagnation.

We seem to be far away from economic recovery.