Manufacturing, services sectors dip in April

•  PMI survey points to positive expectations for business activities to improve in next three months

The country’s manufacturing and services sector activities decreased in April as per the Purchasing Managers’ Index (PMI).

Following the seasonal pattern, Manufacturing PMI decreased to 34.7 in April 2023, indicating a month-on-month contraction in manufacturing activities. In March Manufacturing PMI turned positive in March 2023, after nine consecutive survey rounds, recording an index value of 51.4.

PMI compiler Central Bank of Sri Lanka said Production, New Orders, Employment and Stock of Purchases sub-indices declined during April compared to the seasonal peak in March.

As per the respondents, the decline in Production was primarily due to the temporary closure of most of the factories in April owing to the Sinhala and Tamil New Year holidays.

Decline in New Orders, particularly in the manufacture of food and beverages, was mainly due to the end of the festival season demand. In addition, some respondents in the manufacture of textiles and apparel sectors mentioned that they observed a continuation of the subdued global demand conditions, resulting in a decline in New Orders. Further, Employment and Stock of Purchases also declined in line with the declines in New Orders and Production. Meanwhile, Suppliers’ Delivery Time slightly lengthened in April 2023, compared to the previous month on a month-on-month basis.

CBSL said expectations for manufacturing activities for the next three months indicated an improvement, anticipating a favourable development in the economic environment.

The Services sector PMI remained slightly below the neutral threshold recording an index value of 49.6 in April 2023, led by the decreases observed in New Businesses, Employment and Backlogs of Works.

In March Services sector PMI returned to growth territory, recording an index value of 55.1 in March 2023 indicating an expansion across the services sector.

CBSL said Business Activities and Expectations for Activity continued to increase during April. New Businesses declined in April 2023 compared to March 2023, particularly with the decreases observed in insurance, transportation and postal and courier activities sub-sectors.

Business Activities in the services sector continued to grow, yet at a slower rate, in April. Accordingly, business activities in other personal activities sub-sector exhibited a considerable improvement amid the festive season. Further, education and telecommunication sub-sectors also recorded slight increases during the month. Meanwhile, business activities related to the wholesale and retail trade sub-sector remained stagnant despite festive demand and seasonal discounts.

Employment continued to decline in April at a higher pace due to resignations, migrations and retirements despite few new recruitments taking place during the month. Meanwhile, Backlogs of Work also decreased at a higher rate during the month.

Expectations for Business Activities for the next three months remained improved in April driven by positive sentiments regarding improvements in macro-economic conditions.