India's been championing its credentials as the world's new growth engine while China stutters. Data suggest it's stepped up to the plate.
August industrial production (IP) and September consumer price inflation (CPI) figures released late on Monday underscores the resilience of the economy despite headwinds like a below-average monsoon, Citi said in a note. India's annual rainy season is a major factor for economy and this year's monsoon is being called the worst in six years, with a 14 percent rain deficit, according to local media.
Still, IP surged to a three-year high of 6.4 percent on year in August, well above consensus and strengthening further from July's revised increase of 4.1 percent. Driving the impressive reading were a 21.8 percent annual spike in capital goods and a 17 percent gain in consumer durables, the latter's third straight month of double-digit gains. Overall production is benefitting from lower commodity prices as companies in India, a net oil importer, save big on input costs.
"While we've been careful of reading too much into the often volatile monthly variations of the IP data given the outdated base year, the trend is clearly one of improvement and hence some optimism is warranted on growth," remarked economists at ANZ in a report.
India's performance stands out among its Asian peers and the broader emerging markets sphere, where factory output remains in the doldrums.