The country’s manufacturing and services sector bounced back in September after suffering a sharp dip in August.
As per the Purchasing Managers’ Index (PMI) compiled by the Central Bank, the manufacturing sector rebounded to 54.3 in September 2021, increasing by 9.2 index points compared to August 2021.
The Services PMI entered the growth territory reporting an index value of 52.2 in September 2021 following the dip observed in August 2021.
In August, the manufacturing PMI fell by 12.7 points and the services PMI by 46.2 points.
The Central Bank said the manufacturing rebound in September was mainly attributable to the significant improvements observed in New Orders and Employment sub-indices.
It said the increase in New Orders, particularly in the manufacture of textile and wearing apparel and food and beverages sectors, contributed considerably to the overall improvement in the PMI.
“Some respondents in the textile and wearing apparel sector mentioned that they received a large number of export orders in September with the normalisation of the economies in the major export destinations,” the CBSL said.
Employment has also increased, especially in the manufacture of textile and wearing apparel sector, where new recruitments resumed with the tapering off of the pandemic situation.
However, Production and Stock of Purchases have remained closer to the neutral level with a marginal contraction during September 2021.
Some respondents in the manufacture of food and beverages sector highlighted that they had to slow down the factory operations due to the lower availability of raw materials. Further, the continuous increase in the cost of imported raw materials, particularly due to rising global commodity prices, has also been highlighted as a major concern.
Suppliers’ Delivery Time lengthened in September 2021. CBSL said in the next three months, expectations for manufacturing activities remain at elevated levels anticipating further improvements in economic conditions, locally and globally.
The rebound in services PMI in September was underpinned by the increases in New Businesses, Backlogs of Work and Expectations for Activity sub-indices.
CBSL said new businesses increased in September compared to the previous month mainly with the improvements observed in transportation, solely related to freight forwarding, financial services, education and telecommunication sub-sectors.
Business activities in transportation, solely driven by freight forwarding, education and insurance sub-sectors showed improvements during September. However, business activities in other personal activities, wholesale and retail trade, human health activities and accommodation, food and beverage sub-sectors were largely affected due to the quarantine curfew imposed throughout the month.
“As such, Business Activity sub-index edged up in September, yet continued to remain below the threshold level,” CBSL said.
Employment sub-index continued to remain in the negative territory with retirements and voluntary resignations amid comparatively low level of new recruitments.
It said backlogs of work continued to increase in September since a limited staff reported to work amid prolonged travel restrictions and COVID-19 infections among staff members. Expectations for Business Activities for the next three months increased in September following the lift in travel restrictions and fall in domestic COVID-19 cases.
“Nevertheless, some respondents continued to express their concerns with regard to adverse effects on business operations from import restrictions and increase in input costs,” CBSL added.
(FT)