India’s core sector expanded 2.2% in January, a mild increase from 2.1% in December, data released by the commerce and industry ministry showed on Friday.

The eight infrastructure industries grew 1.5% in January last year. Economic Affairs Secretary AtanuChakraborty said growth in core sector industries during December and January “augurs well” for the manufacturing sector in the January-March quarter of the ongoing fiscal year.

The government also revised upward core sector growth in December to 2.1% from 1.3% earlier due to revisions in the output of coal, steel and electricity.

“The core sector data for January 2020 offers mixed cues but the growth in output for the second consecutive month, after four months of contraction, offers some encouragement,” said AditiNayar, principal economist at ICRA.

The eight core industries comprise 40.27% of the Index of Industrial Production (IIP). The growth was aided by increased output in five out of eight industries — coal, refineries, steel, cement and electricity.

“Based on the core sector growth, IIP is expected to grow by 2-3% for January. We are expecting IIP to grow by 2% for FY20,” said Madan Sabnavis, chief economist at CARE Ratings.

Factory output contracted 0.3% in December. The statistics office will release the IIP data for January on March 12.

Coal production touched a 10-month high of 8%. Electricity generation was up 2.8% in January.

In the April-January period, core industries growth slowed down to 0.6% against 4.4% in the year ago period.

Output of crude oil, natural gas, and fertiliser contracted 5.3%, 9.1% and 0.1%, respectively in January.

Refinery products, which have the highest weightage in the eight core industries, grew 1.9% in January, as against a contraction of 2.6% in the comparable month last year. “It can partly be ascribed to the increased production of BS-VI fuel by refiners to meet the upcoming demand ahead of the implementation of BS-VI norms from April,” Sabnavis added.