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The SBI Composite Index, an indicator for tracking India’s manufacturing activity, has shown a significant growth in output both in terms of month-on-month and yearly basis in March.
The monthly index has shown robust growth of 58.5 in March 2015, from 47.6 in February 2015, signalling the highest pace of growth in the last 48 months.
“Robust recovery in the month on month index may be attributed to seasonal factors as March sequential momentum is always higher,” SBI said in a research note.
The monthly index had slipped from 52.6 in January 2015 to 47.6 in February 2015.
The yearly SBI Composite Index for March 2015 inched up to 54.6 from 53.5 in February 2015, a six-month high.
The index captures two components of the manufacturing cycle — month-on-month and year-on-year —growth on a scale of 0 to 100.
Index above 50 implies growth over previous respective period and less than 50 will suggest a contraction over respective period.
An index value of less than 42 means large decline, while value of 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), 52 to 55 (moderate growth) and above 55 high growth, SBI said.
The research report said revival in automobile sales, capital goods and basic goods production and possible upturn in the credit offtake to micro and small corporates segment, real estate, NBFCs and construction sector highlights possible sustainable recovery in economic activity in coming months.
“Manufacturing activity is getting robust with a positive growth for the third consecutive month since November 2014,” the report said adding that IIP has averaged 3.2 per cent growth since November 2014.
“We believe that if February and March numbers also reveal moderate growth as per our prognosis, then April numbers will be most crucial. A robust SBI Composite Index for April 2015 (to be released aftermath April 10, 2015) may provide the vindication to sustainability of current IIP numbers, assuming February & March numbers are as per our forecast,” it added.
The SBI Composite Index rivals the existing data point from British lender HSBC. It has been developed on the basis of the bank’s internal loan portfolio, which mirrors the credit demand in the country, and other data sets available in public domain.
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