The SBI Composite Index, a leading indicator of manufacturing activities in the economy, improved to 50 in August, while the monthly index crossed 60, indicating the rate of decline is easing with the economy opening up slowly.

The yearly SBI Composite Index for August has touched the benchmark 50 and is at 50.4 (low growth) in August compared with 46 (low decline) in July 2020, a release said.

The monthly index increased sharply to 63 (high growth) in August compared with 40.5 (large decline) in July 2020, it added.

“Based on the SBI index, we believe IIP and IIP manufacturing could still contract 5-6 per cent in July and around 1 per cent in August 2020,” Soumya Kanti Ghosh, group chief economic adviser, State Bank of India, said.

The index data seem to be in line with the PMI survey released on Tuesday, which indicated that after five months of contraction, the manufacturing sector expanded in August.

The headline seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) rose from 46 in July to 52 in August.

Analysts said these data do not indicate turnaround in the economy. “The rise in August’s manufacturing PMI is cold comfort when set against the extremely weak GDP data,” Shilan Shah, senior India economist, Capital Economics, said.