Industrial production shrinks further in May as lockdowns take hold

The country’s manufacturing activities, which plunged in April, shrank further in May after movement restrictions on and other economic activities were intensified disrupting the smooth functioning of factories, putting a further dent on their output. 

The Index of Industrial Production (IIP), the key gauge of the country’s factory output, slipped to 93.2 index points in May from 93.9 index points in April but up from 79.2 index points in the same month in 2020 when the factories started re-opening from nearly two months long lockdowns. Among the key industries which contributed to the dent in the overall industry output were food products and beverages, which recorded index points of 92.8 and 91.8 respectively from 103.3 and 126.1 index points in April this year.  This also explains why the prices in the domestic market rose for key staples consumed by people as the virus related restrictions dealt a blow to key food supply chains. 

The manufacturing of tobacco products also fell slightly in a telltale of weaker sales at Ceylon Tobacco Company PLC during its fiscal second quarter due to a mandatory closure of retail outlets for a month through June 21, when the lockdowns ended. Meanwhile, the manufacturing of textiles showed some recovery as the index rose to 136.2 points from 97.8 points in April but wearing apparels slipped further as reflected from the index fall to 68.8 points from 73.4 points in April.  

The two related industries reported 135.5 and 131.2 index points each in March as the textile and garments industry was off to a robust ascent from domestic and foreign demand. 

However in June, activities in the broader factory activity appeared to have recovered from the depths they reached in May as the Purchasing Managers’ Index for manufacturing pointed to a surprise expansion in June although three weeks in that month was under lockdown. 

Among the other prominent industrial activities, which recovered from the April slump were manufacturing of coke and refined petroleum products, chemical and chemical products, rubber and plastic products and manufacturing of basic pharmaceutical products and pharmaceutical preparations.