Manufacturing sector grows at moderate pace in October 2016

Both manufacturing and service sectors of Sri Lanka expanded in October 2016 albeit the moderate pace of growth of the manufacturing activities, the Central Bank’s recently released Purchasing Managers’ Index (PMI) Survey showed.

The Manufacturing Sector PMI stood at 56.5 in October compared to 57.7 in September 2016. The deceleration in PMI indicate that the manufacturing activities are expanding at a moderate pace in October 2016.

The Services Sector PMI increased to 59.3 index points in October from 57.7 index points in September 2016. The increase in PMI over the last month’s value indicates that economic activities in the Services sector expanded at a higher rate in October 2016 compared to the previous month.

The deceleration of the Manufacturing Sector in October compared to September was mainly due to the moderated pace in which Production and New Orders sub-indices performed. The Stock of Purchases sub-index increased significantly in October indicating a stack of stocks for the upcoming season while Suppliers’ Delivery Time increased marginally. The Employment sub-index also decelerated compared to the previous month. Overall data points to an expansion where all the sub-indices are above the neutral 50.0 threshold. The expectations for activities indicate an improvement for the next three months.

The increase in Services PMI was caused by increases in New Businesses, Business Activity, Employment and Expectations for Activity sub-indices. However, Backlogs of Work declined in October 2016 compared to the previous month. Prices Charged, which is not taken into consideration in PMI compilation process, increased at a higher rate in October 2016.