Indicating a pick-up in the economy, SBI Composite Index hit a six-month high in November. The index, which captures growth in manufacturing cycle, was at 54.5 compared to 53.5 in October.
“Our internal prognosis suggests that credit growth is likely to grow in infrastructure sectors such as power and roads. We also expect a smart growth in personal loan segment especially in housing. As our SBI index predicts the industrial growth two-months in advance, our index numbers indicate acceleration in industrial production in coming months,” SBI said in a statement.
It added that the Seventh Pay Commission will have positive impact on steel and cement industries. “Additionally, healthy order book if coupled with faster execution will show positive results for the capital goods and infrastructure sector. There is an immediate need to increase import duty on long steel products. The Government should also provide infrastructure status to steel industry,” it said.
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.
According to the HSBC index data for October, business activity improved (53.2 against 51.3 in September) but manufacturing slowed. The pick-up in services offset the softening in PMI Manufacturing and the composite output index rose to 52.6 as against 51.5 in September. Index of Industrial Production (IIP) growth for September was also weak at 3.6 per cent with cumulative growth in first half being 4 per cent.