Economic activities continue to expand as PMI logs higher values

The manufacturing sector resumed expansion while the services activities continued their growth in May, as the Purchasing Managers’ Index (PMI) signalled that the economic activities continue to do well, supported by the lower prices and interest rates.

The manufacturing sector PMI logged an index value of 58.2 in May, recovering from 42.0 recorded in April, indicating that the expansion in the manufacturing activities is intact.

The April contraction was an aberration caused by the extended holidays that were there, due to the traditional new year celebrations.

But in May, most respondents to the survey pointed to the more working days in the month for the considerable increase in production activities.

Meanwhile, all sub-indices under the manufacturing PMI, with the exception of employment, recorded growths, while employment too reached close to the neutral level in May.

Under the PMI, an activity is split between an expansion and a contraction at an index value of 50.0.

Meanwhile, under manufacturing, the new orders and production sub-indices have increased predominantly, due to the increase in the food and beverage manufacturing sector, signalling the recovering consumer demand.

While the sector overall remains upbeat over the next three months, many respondents have been cautious about the issues related to container availability in the global shipping industry.

Meanwhile, the services sector recorded an index value of 55.0 in May, softening from 56.7 in April but the activities pointed to continued expansion.

This was coming from many business sectors and the financial services continued to grow, helped by the declining interest rates.

Meanwhile, the transportation recorded a considerable growth, followed by telecommunication, real estate, health and professional services.

However, there is some decline in the activities in the accommodation and food and beverage sectors, due to the decline in the tourist arrivals in May, compared to the April levels.

Further, the business activities in the wholesale and retail trade also declined, due to the end of the festive season.

The sector participants expressed optimism over the continued growth in business at higher levels over the next three months, due to the favourable macroeconomic conditions.