Manufacturing sector slowing down: CII

New Delhi: The manufacturing sector has started showing signs of slowing down especially, in consumer durables and automobile industry while the profitability of services sector has already seen moderation, the Confederation of Indian Industry (CII) said in its quarterly report on the "State of the Economy".

The report said the automobile industry sales grew at 0.8 per cent in the month of March 2007 as compared to 20.4 per cent in March 2006. Similarly, growth of production of consumer durables stood at 1.6 per cent for February, 2007 compared to 20.3 per cent during the same period last year. These sectors, which start demonstrating impact of interest rate interventions the earliest and therefore, are very significant, the CII held.

However, the report found that India Inc continued its bull run during the third quarter of 2006-07 and the net sales and profit after tax (PAT) of 3834 firms surveyed, grew by 21 per cent and 74 per cent respectively compared to 18 per cent and 1 per cent recorded a year earlier.

CII said much of the growth in sales is owing to domestic consumption having gone up on the back of a buoyant economy.

The CII has projected that with interest rates rising and demand contracting and exports slowing down, it is only a matter of time before manufacturing sector also comes under pressure and starts slowing down.