Industrial output growth slows to 10-month low of 1.5% in June

New Delhi: India's industrial output growth dipped to a 10-month low of 1.5 per cent in June dragged by contraction in electricity and mining activities due to early arrival of the monsoon, as per official data released on Monday.

Factory output as measured by the Index of Industrial Production (IIP) had posted a growth of 4.9 per cent in June 2024. In its monthly report the National Statistics Office (NSO) revised May IIP growth data upward to 1.9 per cent from an earlier estimate of 1.2 per cent reported last month.

The IIP growth has sequentially declined for three consecutive months. This has happened for the first time in around three years.

Mining output in June 2025 was 8.7 per cent lower when compared with the same month last year while there was 2.6 per cent year-on-year decline in electricity production.

According to analysts, electricity and mining output was impacted during the month due to early arrival of the monsoon.

“The continued contraction in mining (third consecutive month) and electricity sector (second consecutive month) has led to the factory output moderating to a ten-month low in June 2025,” said Devendra Pant, Chief Economist, India Ratings and Research.  

Manufacturing output, which carries the largest weight in the Index of Industrial Production (IIP), posted a growth of 3.9 per cent in June, the highest in three months, from 3.2 per cent recorded in May.  

Average industrial production growth in the first three months of the current financial year stood at 2 per cent, which is the lowest in five years.

In terms of the use-based classification, the sequential slowdown in the IIP growth was driven by the sharp dip in the performance of capital goods. It dipped to an eight-month low 3.5 per cent in June from 13.3 per cent recorded in the previous month.

Contraction in primary goods output worsened in June 2025, reflecting the weaker performance of the mining sector, said Aditi Nayar, Chief Economist, ICRA.

The other four use-based categories reported improvement in their growth in June 2025 relative to the previous month.

Consumer non-durables output declined by 0.4 per cent year-on-year during the month under review while primary goods production dipped by 3 per cent. However, output of consumer durables rose by 2.9 per cent in June.

The silver lining was sequential improvement in growth of intermediate goods, infrastructure/construction goods and consumer durables. Barring primary goods and consumer non-durables, output growth of other use-based groups remained positive in the month of June 2025.

Pant said the effect of sustained decline in inflation and monetary policy easing would be reflected in the IIP numbers positively in the next couple of months.