New Delhi, Sept. 12: Industry grew 7.1 per cent in July on the back of a strong showing by consumer durables and capital goods.

Capital goods production growth surged 21.9 per cent from 12.3 per cent a year ago, while consumer durables production jumped to 11.2 per cent from minus 2.7 per cent growth a year ago.

Growth was 5.4 per cent in June and 3.8 per cent in May, while it was 8.3 per cent a year ago.

The response among analysts was mixed. According to Sonal Varma, an economist with Lehman Brothers, “The industrial output report is better than expectations. The sharp surge in capital goods growth is positive, as it suggests that investment activity is ongoing.”

Varma said hurdles to growth would remain, and expected industry growth for the fiscal would be 6.7 per cent.

Shubhada Rao, economist with Yes Bank, said, “As expected, consumption goods have shown strength, but the positive surprise was from capital goods. Industrial growth is likely to extend its strength from here on, albeit with some interim dips.”

Manufacturing, which contributes about 80 per cent to the index of industrial production, grew 7.5 per cent in July compared with 8.8 per cent a year ago. Electricity generation growth was 4.5 per cent, against 7.5 per cent a year ago.

Mining growth was higher at five per cent from 3.2 per cent a year ago.

The growth rate in consumer non-durables slowed down to 6.1 per cent in July, from 12.2 per cent in June and 10.5 per cent a year ago.