Manufacturing and service activities contract in April 2017

Both the manufacturing and service sectors of Sri Lanka contracted in April 2017 after a significant increase in March 2017 as the country celebrated the New Year in April, the Central Bank’s Purchasing Managers’ Index (PMI) Survey revealed yesterday.

According to the survey, Manufacturing PMI decreased by 24.7 index points to 41.8 in April 2017 while the Services Sector PMI declined to 54.2 in April from 60.8 index points in March 2017.

This decline in manufacturing activities in April 2017 was largely attributed to the decrease in the Production and New Orders sub-indices as the New Year holidays in April contributed to the seasonal decline in manufacturing activities.

All the sub-indices of PMI declined in April compared to the previous month and except for the Suppliers’ Delivery Time sub-index dropped below the neutral 50.0 threshold.

However, the expectation for activities indicates an improvement for the next three months.

The decline in PMI of Services Sector in April 2017 was supported by New Businesses, Business Activity and Expectations for Activity. Backlogs of Work and Employment declined in April compared to March 2017.

The Employment sub-index recorded a value below the 50 threshold for the first time since the survey began in May 2015, mainly due to delays in new recruitments. Prices Charged, which is not taken into consideration in the PMI compilation process, increased at a moderated pace in April 2017 compared to the previous month. Future Labor Cost, as measured by Expectations for Labor Cost, continued to increase in April 2017.