The SBI Monthly Composite Index, a leading indicator for manufacturing activity in Indian economy, inched up from 46.8 in April 2015 to 53.8 in May 2015,
Key Points of the report :
- The SBI Monthly Composite Index increased from 46.8 in April 2015 to 53.8 in May 2015.
- The yearly SBI Composite Index for May 2015 decelerated to 56.4 in May from 58.2 in April 2015,due to
o Entrenched disinflationary impetus
o Weak Demand
- Future outlook
o Credit Growth is expected to be moderate,
o Commercial Vehicles Sales would be subdued
o Weak Demand
o Inflation will be on downside
o Low Capex
o Weak Corporate Earnings.
o Retail inflation likely to be at sub-4 per cent within the next two-three months.
o Infra activities will start possibly from the second half of this year.
o Wholesale prices will remain in deep negative territory for most of 2015, if not the entire duration.
o Overall,the outlook is bearish.
- The report observed that it is imperative to improve sentiment further through another round of monetary easing.
About SBI Monthly Composite Index :
- A leading indicator for manufacturing activity in Indian economy.
- The SBI Composite Index have both monthly and yearly indices.
- To represent the manufacturing sector, SBI is using the monthly Index of Industrial Production data rather than GDP figures
- An index value of Less than 42 means large decline.
o Value of 42 to 46 – moderate decline,
o 46 to 50 – low decline,
o 50 to 52 – low growth,
o 52 to 55 – moderate growth and
o Above 55 – high growth.
- 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.