Services sector activities contract in May; manufacturing recovers

• Employment sub index records lowest value due to loss of employment in tourism sector
• Manufacturing recovers on increased apparel sector productions

Sri Lanka’s services sector activities further contracted in May following Easter bombings, while manufacturing activities recovered with increased production in the country’s apparel sector, Sri Lanka Purchasing Managers’ Index (PMI) for the month of May showed. 
The services sector PMI index value for May stood at 44.7, down 0.6 points compared to April with the employment sub index recording the lowest value of 36.4 since the beginning of the survey in May 2015 due to discontinuation of employees’ service contracts in the travel and tourism sector following the Easter attacks.
Further, deterioration of business activity was also observed in the wholesale and retail trade, and transportation sub sectors. 
Many respondents highlighted the uncertainty arose from Easter Sunday attacks still prevail in the country. Thus, new businesses and expectations for activity continued to decline compared to previous month, yet at a slower pace..

Prices charged in the services sector increased at a slower rate in May 2019 due to price discounts offered by hotels and other firms.
Further, expected labour cost for next three months increased at a higher rate in May 2019.
The Global services PMI declined to 33-month low of 51.6 in May 2019 from 52.7 in April 2019 indicating a slowdown in the global services sector output growth.
Meanwhile, the manufacturing sector PMI recovered to an index value of 50.7 in May, which is an increase of 9.7 index points compared to April 2019.
The recovery of manufacturing PMI is mainly attributable to the significant increase in production and new orders, especially in manufacturing of textiles, wearing apparels, leather and related products.
Increase in production was mainly attributable to the fulfillment of accumulated orders using extra hours in factory operations. 
Many respondents, especially in textile and apparel sector, highlighted that they had to work extra hours on week days as well as during weekends of the month to clear the backlog of orders.
All sub-indices of PMI Manufacturing except for Employment and Stock of Purchases recorded values above the neutral 50.0 threshold signalling an overall expansion in manufacturing activities in May.
The global manufacturing PMI recorded a value of 49.8 in May with a decline of 0.6 index points from April.