India's manufacturing sector growth declined both in terms of month-on-month as well as yearly basis in July, an SBI research report said, adding that the June IIP numbers may continue to be weaker.
The yearly SBI Composite Index, an indicator for manufacturing activity in the country, for July declined to 49.7 from 53.2 in June 2015. The Monthly Index also declined from 47.0 in June to 46.7 this month.
Going forward, IIP numbers for June may continue to be even weaker as the yearly SBI composite index for June 2015 had witnessed a decline, the report said. It further added that the declining momentum in credit growth is likely to have started impacting and this is leading to decrease in momentum of IIP growth.
On the positive side, however, the July SBI index may signal that the deceleration in manufacturing momentum may be bottoming out, SBI said. Government push on infra, defence and renewable power seems to be the three pillar of future growth in the banking sector, it added.
Sector-wise, the road sector has drawn renewed interest in the wake of policy thrust by the new government. Moreover, outlook for sectors like textile, wood and wood product and auto components looks positive. An index 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 SBI Composite Index rivals the existing data point from British lender HSBC. It has been developed on basis of the bank's internal loan portfolio, which mirrors the credit demand in the country, and other data sets available in public domain.