The yearly SBI Composite Index for February 2015 inched up to 52.9 (Moderate growth) from 52.1 (Moderate growth) in January 2015, a 2 month high. In contrast, the Monthly Index has slipped from 52.1 (Moderate growth) in January 2015 to 48.3 (Low Decline) in February 2015, a 4 month low. Sharp contraction in the month on month index may be attributed to less number of working days in February compared to January.
However, revival in Automobile sales, Capital goods and Consumer non-durables productions and possible upturn in the credit offtake by large corporates segment highlights possible recovery in the economic activity in coming months. However, on the flip side, consumer durable sales have not yet bottomed out. Bank credit and deposit continues to remain sluggish. Interestingly, growth in credit card outstanding continue to push up credit growth. Contraction in the Monthly index probably drag down the yearly index after a while.
The Index captures two components of the manufacturing cycle namely 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.
* The SBI Composite Index, a leading indicator for manufacturing activity in Indian Economy aiming to foresee the periods of contraction and the expansion.
* The Composite Index have mainly two indices namely SBI Monthly Composite Index and SBI Yearly Composite Index. Both the indices fulfill complementary purposes such as month on month sentiment movement vs. year on year growth forecast respectively.
* The complementary nature of these indices help user to gauge the sentiments in the markets. A consistent negative (positive) month on month forecast in the index will lead to negative (positive) growth rate in year on year index after a while.
* The yearly SBI Composite Index for Feb’15 inched up to 52.9 (Moderate growth) from 52.1 (Moderate growth) in Jan’15. In contrast, the Monthly Index has slipped from 52.1 (Moderate growth) in Jan’15 to 48.3 (Low Decline) in Feb’15. Sharp contraction in the month on month index may be attributed to less number of working days in February compared to January.
* However, a revival in Automobile sales, Capital goods and Consumer non-durables productions and possible upturn in the credit offtake by the large corporates segment highlights possible recovery in the economic activity in coming months. Consumer durable sales have not yet bottomed out. Bank credit and deposits continues to remain sluggish. Interestingly, growth in credit card outstanding continue to push up credit growth. Contraction in the in the monthly index probably drag down the yearly index after a while.
* Benign wholesale as well as retail inflation accompanied by a lower cost of borrowing is expected to boost positive sentiment in the economy in coming months and possibly drive credit cycle and growth. Both the components of the index are scaled from 0 to 100. Index above 50 implies growth over previous respective period and less than 50 will suggest a contraction over respective period.
Note: In continuation to the launch of the SBI Composite Index on December 9, 2014, State Bank of India herewith releases yearly as well as monthly Composite Index value for the month of February 2015.