Manufacturing and services sectors expansion slows in August

The expansion of the manufacturing and services sectors slowed in August in comparison to July as per the Purchasing Managers Index (PMI).

The Central Bank said yesterday the Sri Lanka Purchasing Managers’ Index for Manufacturing

(PMI – Manufacturing) recorded an index value of 55.5 in August 2024. This indicates an expansion in manufacturing activities, yet at a slower rate compared to the previous month. All the sub[1]-indices, except for Employment, remained above the neutral threshold in August.

In July however, the manufacturing PMI recorded an index value of 59.5 and in June it was 56.6.

CBSL said in August the expansion in New Orders and Production was mainly driven by the manufacture of food and beverages. Further, Stock of Purchases expanded during the month in line with the New Orders and Production. However, Employment decreased on a month-on-month basis in August. Meanwhile, Suppliers’ Delivery Time continued to lengthen during the month.

CBSL also said expectations for manufacturing activities over the next three months remain positive, primarily due to the optimistic outlook on year-end seasonal demand, in spite of the election uncertainties.

The Sri Lanka Purchasing Managers’ Index for Services (PMI – Services), as reflected by the Business Activity Index, recorded an index value of 65.2 in August 2024. This indicates a slower expansion in services activities compared to the previous month.

In July PMI – Services indicated a further expansion in services activities as reflected by the Business Activity Index, which reached an index value of 71.1, the highest value recorded so far this year.

The expansion in Business Activities was driven by the improvements observed across most sectors. Accordingly, Business Activities in the other personal services grew mainly due to improvements in entertainment and recreation activities. Further, Business Activities in the wholesale and retail trade, transportation services and financial services also indicated a considerable growth during the month. However, Business Activities in the telecommunication, real estate and IT programing consultancy related activities remained at the same level as in the previous month, while activities in all other sectors recorded improvements.

CBSL said New Businesses increased in August, particularly with the expansions observed in other personal and financial services activities.

Employment continued to decline marginally in August, as in the previous month. However, Backlogs of Work improved during the month after a continuous decline over the past twenty-four months.

Expectations for Business Activities for the next three months continued to improve, although at a slower rate, supported by favourable macroeconomic conditions.