Manufacturing and services activities expand in December

• Manufacturing PMI records sharp increase as workers return to work
• Holiday traveling by locals boost accommodation, food & beverage sectors

The Purchasing Managers’ Index (PMI) for both manufacturing and services continued its expansion in December indicating that economic activities are recovering much faster than expected and virus related restrictions are only having minimal impact.

According to the latest data for December 2020, the manufacturing PMI logged a robust 61.2 index points, sharply up from 57.6 index points in November, as factories and their employees returned to work adhering to health guidelines to power economic value generation after activities temporarily ebbed in October due to virus-related restrictions.  

“This was mainly attributable to the increases observed in production, new orders, employment, and stock of purchases sub-indices,” the Statistics Department of the Central Bank said in a statement.

A reading of PMI above 50 index points indicates an expansion of activity levels while a reading below 50 indicates a contraction. 

The quick rebound in manufacturing activities in the immediate aftermath of both lockdown waves in May and October is a sign that the country’s manufacturers remain lively and resilient. 
“The significant increase in production and new orders sub indices, particularly in the manufacture of food & beverages sector, has mainly contributed to the improvement in the overall index,” the statement added. 

The survey respondents in the manufacturing sector remain upbeat of the prospects of coming three months as they expect the economic activities to normalise within the country as well as in the major export markets. 

Meanwhile, the services PMI also expanded during December, recording an index value of 55.6 points from 48.8 percent recorded in November. 

The expansion in new business activities, backlogs of work, and positive expectation for future work remained the key movers of the overall services PMI. 

“New businesses increased further in December 2020, particularly with the improvements observed in financial services and insurance sub- sectors,” the statement said.
Something that stood out was the improvement seen in accommodation, food and beverage sub-sectors, “mainly due to domestic 
tourism during the holiday season”. 

“Further, business activities in transportation and wholesale and retail trade sub-sectors expanded owing to the relaxation of travel restrictions to some extent during December 2020,” the statement added.