August industrial production up despite lockdowns

• Apparel sector seeing strong order books with clients in West stocking up early to avoid shipping delays

Industrial production, which measures the country’s manufacturing firepower, added a little bit more strength in August, as the  apparel sector gained steam with manufactures ramping up production amid strong order books.
Sri Lanka recorded a seasonally adjusted Index of Industrial Production (IIP) of 105.0 in August, up 0.2 percent, from the 104.8 index points recorded in July, reflecting the virus and related lockdowns had had only a limited impact on the direction of the industrial activity in the country, the data released by the Census and Statistics Department early this week showed.  

Sri Lanka went into a seven-week soft lockdown on August 20 but the authorities made sure that its manufacturing industries function with minimum disturbances to keep the impact on production, exports and jobs to prevent the full blown economic collapse. 

 However, in the same month, the manufacturing Purchasing Managers’ Index (PMI), a much broader gauge of the manufacturing activities, going beyond the industrial activities, fell below 50.0 neutral level to record 45.1 index points, reflecting a contraction. 

The September PMI is due this week and would provide how the broader manufacturing activities had fared during the soft lockdowns, which remained throughout the entire month. 

The August industrial production has been mainly powered by the apparel sector, which gained in manufacturing strength, as the sector represented by both textiles and wearing apparel saw strong order books from their key clients in the West, as they began stocking up merchandise early for the upcoming yearend holiday season to avoid possible shipping delays. 

How intense the level of shipping delays is reflected from the fact that some of the big retail chains such as Walmart, Home Depot, Costco, Wholesale Corp and Target Corp. have resorted to chartering private cargo ships to get around the shipping delays, port congestions and worker shortages, which snarled the product flows between Asia and North America.  Manufacturing of textiles and wearing apparels added 0.7 percent and 1.5 percent each into their respective indices of 128.8 and 94.8 index points in August, from their July index levels. 

The other industries, which advanced during August, were leather and related products, coke and refined petroleum products, other non-metallic mineral products and a few others.  Meanwhile, the manufacturing of food and beverages, tobacco, chemical and chemical products contracted in August from July.