17 October 2023 10:30 am Views - 188
Sri Lanka’s manufacturing activities continued to contract in the month of September, amid sluggish consumer demand and increased availability of imported good in the market at competitive prices, presumably due to the phased lifting of import restrictions by the government. The Manufacturing PMI recorded an index value of 45.7 in September, indicating a contraction in manufacturing activities. An index value below 50 indicates a contraction while an index value over 50 indicates an expansion. According to the Central Bank, the manufacture of textiles and wearing apparel sector continued to contract, due to the ongoing sluggish global demand. “The decrease in New Orders and Production was mainly driven by the manufacture of food and beverages and textiles and wearing apparel sectors.
Many manufacturers highlighted the challenging business conditions, due to the lacklustre consumer demand and the increased availability of imported goods in the market at competitive prices,” the Central Bank said. Moreover, the Employment and Stock of Purchases sub-indices also decreased, in line with the decline in New Orders and Production. Meanwhile, Suppliers’ Delivery Time shortened during September compared to the previous month. However, the outlook for manufacturing activities for the next three months remained positive, mainly due to the anticipated increase in demand in the upcoming festive season. Meanwhile, the Services sector PMI recorded an index value of 54.7 in September 2023, indicating an expansion in the services activities at a slower pace compared to the previous month. This was led by the increases observed in the New Businesses, Business Activities, Employment and Expectations for Activity sub-indices. Nevertheless, Backlogs of Works remained contracted during the month. New Businesses increased in September 2023, yet at a slower pace, compared to August 2023, particularly with the increases observed in the financial services, wholesale and retail trade, real estate, insurance and education sub-sectors. Business Activities also expanded in September 2023, showing positive developments in several sub-sectors.
Accordingly, business activities in the financial services sub-sector improved, which further attributed to the gradual increase in credit demand, in line with the declining lending rates. Further, some positive developments were seen in the education and transportation sub-sectors during the month. Meanwhile, the accommodation, food and beverage subsector also continued to increase, yet at a slower pace, following the slight decline in tourist arrivals observed during the month. Employment increased compared to the previous month, owing to recruitments that took place in several companies, while Backlogs of Work decreased at a higher pace. Expectations for Business Activities for the next three months continued to increase at a higher pace in September, led by the expected seasonal demand and improvements in economic activities amid the relaxed monetary conditions.