Manufacturing & services PMI points to continuous expansion in activities through September

The Purchasing Managers’ Index (PMI) for both manufacturing and services activities pointed to persistent expansion in the economic activities in the respective sectors through September 2024, albeit there has been some softening in both from a month earlier.

The PMI for manufacturing logged an index value of 54.1 for September, compared to the 55.5 index value in August.

In services, the PMI value came in at 53.4 for the month, down from a 65.2 index value in August.

In the PMI, an activity is split between an expansion and a contraction at an index value of 50.0. It appears that the elections held in September haven’t had much of a bearing on the economic activities, which have continued to do well, albeit some slowdown.

The manufacturing sector expansion continued mainly from the expansion in the new orders and production sub-indices that came from the food and beverage sector.

And the sector participants remain buoyant on the next three months’ outlook for the sector, due to the coming year-end festive season, where the demand from both local and export clientele is generally higher than the normal times.

Meanwhile, the stock of purchases has also increased during September, due to the same reason, as the stocks are being accumulated through the supply chain, ahead of the upcoming festive season.

The employment sub-index, although continued to remain contracted, it did so at a slower pace, in a sign that the companies are rehiring employees to power their production activities.

The services sector was fuelled by the financial conditions, which are relaxing in response to the decline in the lending rates, which makes the businesses more inclined to borrow for their expanding working capital needs as well for capital expenditure.

They may also be refinancing their existing facilities, which had to be taken when the rates were too high.

Further, the business activities in education, professional services, programming and broadcasting have also expanded during September.    

The business activities in wholesale and retail trade, IT programming and telecommunication have remained at the same levels to that of August, while the declines have been observed in all other activities.

Employment in the sector has continued to decline but at a slightly lesser pace.

Sri Lanka’s economy is doing considerably well this year, as seen from the PMI readings, as the country has looked past the foreign currency troubles, which dogged its economy from the second half of 2021.