Manufacturing and services activities record sharp slowdown in April

• Both record index values below 50 indicating contraction
• Fewer working days, power outages and difficulties in souring inputs for production main reasons
• Overall expectations of businesses for next 3 months deteriorate

Both manufacturing and services activities slowed down significantly in April amid fewer working days, prolonged power outages, and difficulties in sourcing inputs including fuel and cooking gas for the production process.

Accordingly manufacturing PMI declined to an index value of 36.4, down 21.4 index points from a month ago, while services PMI recoded an index value of 43.8, down from 7.5 index points in March.
An index value less than 50 indicates a contraction. 

“The decline in production, particularly observed in the manufacture of food & beverage and textiles & apparel sectors, was due to fewer working days during the month owing to new year holidays, and supply-side constraints including ongoing power outages/energy shortage,” the Central Bank said.

Decrease in New Orders, especially witnessed in the manufacture of food & beverage sector, was due to the end of the festive season demand. Employment also dropped on a month-on-month basis with the increase of absentees following New Year holidays.

Stock of Purchases declined mainly due to the unavailability of required quantities in the domestic market and difficulties in opening letters of credit for importing materials.

Many manufacturers said that they had to slow down production due to the unavailability of required raw materials. 

Meanwhile, Suppliers’ Delivery Time lengthened at a higher pace in April 2022, mainly on account of international logistical issues, clearance delays due to forex payment issues, and diesel shortage.

As manufacturers are concerned about the growing uncertainties from multiple fronts, the overall expectations for manufacturing activities for the next three months deteriorated further in April 2022.

Meanwhile, in the services sector, New Businesses declined in April 2022 for the first time since
August 2021, particularly with the deteriorations observed in accommodation, food and beverage, insurance, real estate and transportation sub-sectors.

Business Activities also declined in April 2022 due to the continuous disturbances to business operations mainly attributable to prolonged power outages and difficulties in sourcing inputs including fuel and gas.

Further, the subdued demand amid reduction in purchasing power, drop in tourist arrivals and uncertainties in the country also affected business activities of some sub-sectors negatively.

Accordingly, accommodation, food and beverage, professional services, education, insurance and real estate sub-sectors recorded major contractions during the month. 

Nevertheless, several companies, mainly in wholesale and retail trade and other personal activities sub-sectors, saw progresses supported by the festive demand, the Central Bank said.

Employment recorded a marginal decline in April 2022 due to contract expirations, retirements and resignations. 
Meanwhile, Backlogs of Work increased for the first time since September 2021 due to power outages, shortages of supplies and transportation difficulties.

Expectations for Business Activities for the next three months deteriorated further in April due to prolonged power outages,supply shortages and sharp increases in prices of fuel, gas andother inputs, increase in borrowing costs, subdued demand for non-essentials and economic, political and social instability in the country.