PMI signals growth in manufacturing and services in February

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 56 in February 2024, indicating an expansion in manufacturing activities.  This improvement was attributable to the increases observed in all sub-indices.

The expansion in new orders and production was largely driven by the manufacture of food and beverages. Many respondents mentioned that they are preparing for the upcoming festive demand. 

However, new orders and production in the manufacture of textiles and apparel sector decreased on a month-on-month basis. 

Employment and stock of purchases expanded during the month in line with the new orders and production. Further, suppliers’ delivery time lengthened at a higher rate in February, on par with the expansion in manufacturing activities and prolonged shipping disruptions caused by the Red Sea crisis.

Expectations for the manufacturing activities for the next three months remain positive, mainly due to the upcoming festival season. 

Sri Lanka Purchasing Managers’ Index for Services (PMI – Services) indicated an expansion in services activities in February 2024 as reflected by the Business Activity Index, which recorded an index value of 53.

The continued expansion in business activities was driven by the improvements observed across several sub-sectors. Accordingly, business activities in the financial services sub-sector increased further aligning with the prevailing low market interest rates. Further, positive developments were also recorded in transportation and education sub-sectors during the month. 

Meanwhile, the accommodation, food and beverage sub-sector continued to grow amid tourist arrivals recording the highest since January 2020.

New businesses increased in February, particularly with the increases observed in transportation and financial services sub-sectors.

Employment increased due to new recruitments made by several companies ahead of the festive season. Meanwhile, backlogs of work continued to decline during February.

Expectations for business activities for the next three months continued to rise in February due to the upcoming New Year and Ramadan season.