Declining output of crude oil, fertilisers and cement pulled down the growth rate of eight key sectors of the industry  - crude oil, petroleum refinery products, coal, electricity, cement and finished steel - to 2.1% in August from 3.8% a year ago, indicating persistent sluggishness in the economy.

The cumulative expansion of these industries during April-August 2012 slowed to 2.8% from 5.5% in the year-ago period.

"The moderation in growth was on account of the negative growth in the production of natural gas, cement, fertilisers and crude oil, besides a decline in the growth rates of steel and electricity production," a statement by the government said.

Economists said the poor performance of the eight key industries reflects economic slowdown. "The core sector numbers are bad. It will have its effect on IIP as well," said DK Joshi, principal economist, Crisil.