June industrial production edges up but nowhere near March highs

•  IIP recorded at 97.2 index points for June, up from 93.2 index points in May 
• Manufacturing food products recovered in June from setback in May

The industrial production in June edged up from the levels seen in May but it was nowhere near the highs it reached in March, prior to the virus resurgence prompted the authorities to reimpose restrictions on the economic activities from around mid-April onwards. 

The Index of Industrial Production (IIP), the key gauge of the country’s factory output, was recorded at 97.2 index points for June, up from 93.2 index points in May and 92.5 index points in the same month last year, when the economy was slowly recovering from a two-month long lockdowns imposed at the onset of the pandemic. 

The March reading of the IIP was at 119.0 index points, when the economy was running at steam ahead of the New Year and the normalising demand from the country’s key export markets. 

Among the key industrial categories, manufacturing of food products recovered in June from the setback in May but the beverage production slumped from May levels, as the sales of alcoholic beverages remained suspended through most of June. 

Manufacturing of tobacco products also confronted a similar predicament during June, due to the prolonged lockdowns. Ceylon Tobacco Company last week said it lost 16 percent of its volume sales during the June quarter from the quarter ended in March.

Meanwhile, the manufacturing of textiles and wearing apparels, comprising of the largest industrial base of the country, recovered from May, as the factories strived to meet the order deadlines from their key export customers after the initial setback caused by the difficulties in getting employees back in their factories, supported by the faster vaccination drive and the increased facilitation by the authorities for the sector to operate with minimum obstacles, as exports remain a priority sector. 

Further, the manufacturing of coke and refined petroleum products slumped in June from May. 
Chemical and chemical products fell sharply while the production of rubber and plastic products slipped in June from May levels. 

 While there was a semblance of recovery in the factory activity in July, from June levels, a sustained recovery remains still in limbo, due to the repeated re-emergence of the virus no sooner every time the restrictions are eased, in a sign that there is no end sight for the virus anytime soon, as it keeps battering the economies and people’s lives for the second year running. 

The July Purchasing Managers’ Index due today could provide a glimpse of how the manufacturing activities have fared during last month.