Growth in industrial production dropped to a three-month low of 3.7 per cent in June mainly because of a poor showing by the manufacturing sector, according to the official data released on Friday.

Factory output growth measured in terms of the Index of Industrial Production (IIP) stood at 12.6 per cent in June 2022 on account of a lower base effect. The previous low of IIP was at 1.9 per cent in March 2023. Thereafter, it rose to 4.5 per cent in April and further to 5.3 per cent in May.

During the first quarter (April-June) of 2023-24, the IIP growth works out to be 4.5 per cent, down from 12.9 per cent in the corresponding period a year ago.

“The growth rates over the corresponding period of the previous year are to be interpreted considering the unusual circumstances on account of Covid-19 pandemic since March 2020,” an official statement said.

“With the risks to global growth titled to the downside, we expect weakness in external demand to persist. On the domestic front, a durable recovery in demand remains important for industrial activity. Domestic demand faces headwinds from the uptick in inflation fuelled by the acceleration in food prices. Moreover, weather-related uncertainties could play a spoilsport for the recovery in rural demand,” Rajani Sinha, chief economist, CareEdge, said.

According to IIP data released by the National Statistical Office (NSO), the manufacturing sector’s output grew 3.1 per cent in June 2023 against 12.9 per cent a year ago.