Manufacturing activity in the country bounced back and entered the expansion territory in February, says a report.

The yearly SBI Composite Index for February is at 51.3, compared to last month index of 47.3. Meanwhile, the monthly Index declined to 49.5 in February, from 52.4 in January 2016.

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 suggest a contraction over a respective period.

The report noted credit growth touched a 10-month high as on February 5, but added refinancing constitutes much of the credit growth, hence it may be difficult to say whether credit growth has picked up materially or in a sustained manner.

“In particular, bank credit to domestic export sector has suffered due to fall in external demand as visible in major export sectors like textile, gems and jewellery. This has led to contraction in demand of credit,” Soumya Kanti Ghosh Chief Economic Adviser & GM Economic Research Department SBI.

Ghosh added that instances of dumping have made revival of certain sectors difficult, thus depressing the demand of credit.

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), it added.

The SBI Composite Index rivals the existing data point from Nikkei. It has been developed on the basis of bank’s internal loan portfolio, which mirrors the credit demand in the country, and other data sets available in public domain.