Manufacturing activities recover in November after October hiccup

• Nov. manufacturing PMI at 57.6 index points, up 17.33 index points from Oct.
• Manufacturers and service providers express optimism on quick revival in future biz.

Sri Lanka’s manufacturing fire power came roaring back during November after a temporary setback in October caused by the COVID-19 resurgence in key populous regions, while services activities also made quick gains, although remaining below the level required to show an expansion in activity. 

Sri Lanka’s manufacturing Purchasing Managers’ Index (PMI) for November recorded 57.6 index points, jumping 17.3 index points from 40.3 recorded for October indicating that industrial activity, predominantly aimed at exports, ploughed ahead while government ramped up its attempts to contain the spread of the virus with minimum impact on economic activities.  

“The significant increase in new orders, particularly in the manufacture of textile & wearing apparel and food & beverages sectors, has mainly contributed to this considerable improvement,” the Central Bank said in a statement. 

A reading above 50 index points in the PMI is interpreted as an expansion of activity. 

“The sub-index of expectations for manufacturing activities for the next three months increased significantly with expectation for the normalisation of economic activities within the country as well as in major export markets,” the respondents to the PMI survey had said. 

Meanwhile, the services sector PMI recorded an index value of 48.8 points in November compared to 41.8 index points in October, indicating a slower decline in activity in November. 

A reading below 50 indicates a contraction in activity. 

The new business sub-index for November increased due to transportation and education sub-sectors while the business activities sub-index improved due to the moderation in contraction of business activities. 

Meanwhile, the business activities in financial services and insurance sub-sectors showed an increase. This is a leading indicator for private sector credit in November from the licensed commercial banks. 

“However, business activities in wholesale and retail trade, transportation, and accommodation, food and beverage sub-sectors declined with the quarantine curfew imposed in the Western province in early November 2020 and localised isolations effected to contain the spread of the second wave of COVID-19 pandemic,” the Central Bank said.  “Nevertheless, respondents in freight forwarding cited that an improvement was observed in their business activities due to the increase in apparel and personal protective equipment exports,” it added. 

Meanwhile all respondents remained hopeful of a quick recovery in services activities as service providers remain optimistic of the recovery of economic activities that were affected by the coronavirus in October.