In a strange twist, the Index of Industrial Production – data I don’t usually take seriously – shows a massive 5.1% drop from October last year. Much of this is because the IIP spiked in October 2010 (showing a 11% growth over the previous year) which moderated in November. But take a look – this is of course interim data and will be revised.

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And in the Use based index we are seeing a collapse everywhere:

All are now below zero.

The broad index has seasonality in it, but the trend looks seriously down.

But don’t trust this data – it’s too volatile.

The Index of Industrial Production has showed a miserably low growth of 1.81% since last year. But I don’t trust this data so we can’t read too much into the headline numbers. In fact, much of the last month’s data has been revised to levels that make any analysis worthless.

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and the Use Based Indexes:

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Nearly all areas are declining, with mining down nearly 6%. The Consumer durables and non-durables areas are still very icky, though the key thing here is October with it’s Diwali effect.

A weak report, no doubt, even though I’d take the data with a pinch of salt.

The Index of Industrial Production (IIP) data for August 2011 was 4.04% higher than last year. Note: This is not very reliable data, so take it with appropriate pinches of salt.

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Mining – now that’s in bad shape. IIP in general is seeing a downtrend, in whatever you can believe.

Let’s look at the “use based” IIP numbers:

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If you remove the squiggles, the downternd is evident in every element; consumer durables and non-durables, which showed some promise recently, have both dipped. Now every use-based element is under 10%.

Revisions – last month which was first revealed at 3.3% is now revised to 3.8%, and May was revised up to 6.2% from 5.9%. But I must complain that they keep changing the numbers – this time, nearly every number from April has been revised.

The Index of Industrial Production (IIP) data was released today and it’s down to 3.3% from last month’s 8.22%. Note that this is a very volatile indicator subject to large revisions, so I do not trust this very much. But since this is the only properly formatted data we have, it’s all we can use.

Revisions: Note that April 2011 was updated from the first reported 5.77% down to 5.32%. This is nice in the sense that they didn’t revise it to –10% or something (it’s that unreliable).

From a use-based perspective, we can see a large drop in Capital Goods (-15.1%). This can’t be surprising – after many industry leaders have been booked on bribery charges, it’s only obvious that things in this government dominated industry will take a break.

Basic goods and Consumer durables did 10% and 8.6% respectively.

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The Index of Industrial Production (IIP) data for Jun is at 8.22%, with Mining slowing down and Manufacturing picking up the slack at 10%.

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On a use based level, there has been a ridiculous 37% growth in Capital goods, but Consumer durables and non-durables dipped.

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While you might think that this shows RBI’s tightening is working, please note that our IIP data is totally unreliable. They will just revise this data a month later and you will have egg on the face.

But the graphs look cool. So they’re on.

The Index of Industrial Production, something I absolutely detest for the massive revisions and complete WTF in comparison with other economic indicators. But this is the obligatory post on the graphs if only to show you how wild this "index" is.

May 2011 elements came in at 5.6% for the overall index (growth over last year), with mining at 1.4%, Manufacturing at 5.6% and Electricity at 10.29%.

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Revisions: the April data, which initially came in at 6.34% has been revised to 5.77%. Feb IIP was increased marginally upwards from 6.48% to 6.67%.

(Note: the initial release for Feb was actually 3.56%, but they have changed the base year from 93-94 to 2004-05, and changed element weights. The new series shows more growth)

When we look at the Use based indexes and growth:

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If we were to believe this data, then there's a slowdown of sorts in Intermediate goods, consumer durables, and capital goods. The rest are benign.

But you can't trust this because they'll revise the May figures. Twice. Once next month and once in October. When we look at the same data then you might notice that the intermediate goods piece was really strong, something like 10% or more. Our statistical department SUCKS.

Having said all of that, the revisions this time were probably the least botherable. I wonder if data collection is this bad for initial figures or is it just picking numbers out of random body part? Still, it's all we have. I will look at Ajay Shah's seasonally adjusted data to be refreshed to look deepr.

Mining came in at 0.21%, the lowest since Feb 2009. Manufacturing was strong at 7.90%, the highest since October 2010 (which was Diwali, btw). Manufacturing is around 80% of the index, so it determines IIP for the most part.

Electricity, the third player that completes the space, is up 7.19%. Electricity is about 10% of the index.

For the whole year, the growth came in at 7.8%. This is highly strange for a country that has, in nominal terms, grown 20%. I'm not sure if I should even trust this data enough to jump to conclusions, at least not for trading!

Would you like to see a better mapping of this data to see where growth was strong and such? I could create that as a treemap or that kind of visualization.

This post is written by Deepak Shenoy, at Capital Mind.

Mining came in at 0.21%, the lowest since Feb 2009. Manufacturing was strong at 7.90%, the highest since October 2010 (which was Diwali, btw). Manufacturing is around 80% of the index, so it determines IIP for the most part.

Electricity, the third player that completes the space, is up 7.19%. Electricity is about 10% of the index.

For the whole year, the growth came in at 7.8%. This is highly strange for a country that has, in nominal terms, grown 20%. I'm not sure if I should even trust this data enough to jump to conclusions, at least not for trading!

Would you like to see a better mapping of this data to see where growth was strong and such? I could create that as a treemap or that kind of visualization.

As you can see, the problem is mining: the growth is just 0.59%. There is a sustained downtrend for two months now, so we might be able to assume the beginning of a problem (IIP data is so volatile and so unreliable that you never ever make a firm decision)

Manufacturing at +3.54% is pretty much par for the course. Remember that February has a budget at the end, and that would hold people's production plans (which is why Feb always has a dip)

Electricity is actually quite strong at +6.75%, but lower than Jan's +10.47%. Power production is strong it seems, though not much of that seems to be coming the way of Gurgaon, going by the number of times the generators need to kick in.

IIP figures seemed to have spooked markets - but everything here is bound to be reviewed and changed. This time, the October 2010 and Jan 2011 data has been changed, but in no major way - Jan has gone up marginally from the earlier reported 3.69% to 3.95%. It's very strange though, that PMI figures vary hugely from the IIP figure (though they should be offset a little bit in terms of time, PMI has shown no signs of contraction)

Look at the equivalent Feb PMI:

I could build complex analysis from the IIP data, but honestly, I do not trust it. Still, it's one of the few data points collected.

This post is written by Deepak Shenoy, at Capital Mind.

As usual, there were crazy revisions. November data which disappointed everyone with 2.7%, is now revised up to 3.62%. September is up to 4.9% from 4.4%. So this could just be a head fake, for all we know.

And the individual components:

Biggest loser was manufacturing at 1.02%. Weirdly, this makes sense - the Manufacturing PMI dropped in Dec as well, and stayed kinda-sorta flat in Jan.

IIP though is a very shady index to follow, so I would be wary of trading it up on down. A better bet would be the budget.

This post is written by Deepak Shenoy, at Capital Mind.