November Purchasing Managers’ Index signals rapid economic expansion following easing of restrictions

• Manufacturing PMI recorded index value of 61.9, services 62.1 
• Services sector optimism at highest since November 2019 
• Survey respondents cite supply chain constraints, rising commodities prices and import-related issues 

The Purchasing Managers’ Index (PMI) for both manufacturing and services activities expanded in November, signalling recovery in economic activities, though risks remain from the evolving pandemic, high external indebtedness and soaring prices.   
The Central Bank on Wednesday released its PMI data for November which had a reading of 61.9 index points for manufacturing, up from 60.4 index points in October. 
The PMI for the services sector was 62.1 index points, up from 57.9 index points a month ago.
PMI is a key gauge of economic dynamism, and a reading of over 50 index value indicates a monthly expansion 
in activities.
Manufacturing activities, which briefly returned to the expansionary territory in September, continued to see more activity with the receipt of new orders adding more production heft. 
This in turn increased the stock of purchases, pushing the index values of all three sub-indices— New Orders, Production and Stock of Purchases—above 60 in November, reflecting high levels of activity. 
Significant increase in new orders was particularly recorded in the manufacturing of food and beverage sector in view of the coming festive season. 
Meanwhile, the textiles and apparel sector increased production level continuing from the recent months due to the seasonal demand. 
And according to some respondents in the textile and wearing apparel sector, they had particularly increased their purchases above their typical inventory holding levels, “anticipating supply-side disruptions due to upcoming Chinese New Year holidays”. 
Meanwhile, in the services sector, New Businesses, Business Activities, Employment and Expectations for Activity sub-indices lifted the overall services PMI index in November with most notable improvements seen in the Employment sub-index and the Expectations for Activity.
The services sector, which saw continuous shrinking in the workforce beginning March this year, saw for the first time increase in employment in November as people returned to work due to improved business activities. 
Meanwhile, the level of optimism on business activities reached the highest level since November 2019 due to relaxed pandemic-related restrictions and the upcoming festive season.However, some respondents were becoming a bit jittery over the new Omicron variant as it had prompted some countries to deploy certain border control measures.

What propelled the services PMI the most during November were the new business activities seen in financial services and transportation sub-sectors followed by wholesale and retail trade and other personal activities 
sub-sectors. 
“Business Activities increased for the second consecutive month stemmed from further recovery in demand following change in consumer sentiments amid relaxed pandemic related restrictions and upcoming festive season,” the Central Bank said.
However, what continued to pester survey respondents in both the manufacturing and services sectors were the rising global commodities prices, supply side constraints and import related issues. 
Sri Lanka’s consumer prices rose to 9.9 percent in November, a thirteen-year high, while the food prices shot up by 17.5 percent.