PMI shows manufacturing and services picking up in Oct.

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Ad campaigns ahead of Elections and promotions by banks increase biz activities

The Manufacturing Purchasing Managers Index (PMI) increased to 57.6 index value in October 2019 mainly due to increase in Production and New Orders compared to September 2019 while services so indicated an uptick, according to data released by the Central Bank.

The increase in Production and New Orders was observed especially in manufacturing of food and beverages sector to meet the upcoming festive season demand.

Meanwhile, Employment also increased in manufacturing of food & beverages and wearing apparel sectors.

This was mainly due to the recruitment of new employees to increase the production levels to meet the higher demand in the period ahead.

Although the New Orders and Production expanded at a higher rate, the Stock of purchases remained broadly unchanged due to accumulated stocks brought forward from previous months.

Further, Suppliers’ Delivery Time lengthened at a slightly higher rate.

All sub-indices of PMI Manufacturing exceeded the threshold of 50.0 (neutral) signalling an overall expansion in manufacturing activities during the period under review.

Services PMI increased to 56.9 index points in October 2019, mainly supported by strong growth in New Businesses and Business Activities compared to September 2019.

New Businesses reached a 19-month high with Financial Services and Insurance sectors dominating in securing new businesses. Business Activities also posted a notable growth in October compared to September 2019, supported by Financial Services, Human Health Activities and Postal and Courier Activities.

Advertising campaigns ahead of the presidential election and increased promotional activities of banks have contributed to the observed increase in Business Activities.

However, Employment in the Services sector continued to remain below the 50-threshold level for the seventh consecutive month, due to delays in recruitments and automation of manual work.

Meanwhile, Backlogs of Work increased in October 2019 after 20 months of contraction, indicating that the excess capacity in the sector is diminishing. This could be partly attributable to the contraction in employment levels amidst the strong growth in New Businesses and Business Activities.

Service providers’ expectations for the next three months improved due to upcoming peak season for tourism, festive season and the expected stability in the political front. Respondents also cited that their businesses have gained momentum post Easter Sunday attacks.