Key Highlights
- Core sector expanded by only 2.9% in February 2025, the slowest pace in the past five months.
- Year‑on‑year growth fell sharply from 7.1% in February 2024.
- Only cement and fertilizers posted positive annual growth, at 10.5% and 10.2% respectively.
- Steel and electricity output recorded modest monthly gains, while coal, crude oil and natural gas contracted.
- Manufacturing PMI slipped to 56.3, indicating a cooling of factory activity.
Detailed Insights
The February 2025 core‑sector indicator, which aggregates eight pivotal industries, registered a meagre 2.9% rise over the preceding month, compared with a robust 5.1% gain in January. The drop is largely attributable to a pronounced base‑effect stemming from the previous year’s leap‑day surge and weaker performance in five of the eight constituent sectors.
Cement and fertilizers emerged as the sole industries to achieve year‑over‑year expansion, posting increases of 10.5% and 10.2% respectively. Steel output improved to 5.6% from 4.7% in January, while electricity generation rose to 2.8% from 2.4%.
Conversely, coal production crept up to just 1.7%, marking its slowest pace in half a year. Crude oil and natural gas outputs continued to decline, falling 5.2% and 6% respectively. Refinery throughput grew a marginal 0.8%, also the weakest level in six months.
The slowdown in core‑sector growth is expected to temper the overall Industrial Production Index (IIP), which had expanded by 5% in January. Additionally, the Manufacturing Purchasing Managers' Index (PMI) eased to 56.3 in February from 57.7 in the prior month, signalling reduced momentum in factory‑level activity.
Key Concepts
- Core Sector: A composite gauge of eight major industries—cement, steel, electricity, fertilizers, coal, crude oil, natural gas, and refinery output—that reflects the health of India’s industrial base.
- Base‑Effect: The statistical distortion that occurs when current growth is compared with an unusually high (or low) figure from the previous period, often exaggerating perceived changes.
- Industrial Production Index (IIP): A monthly metric that quantifies the real output of the manufacturing, mining, and electricity sectors.
- Purchasing Managers' Index (PMI): A survey‑based indicator that assesses the economic health of the manufacturing sector; values above 50 denote expansion.