By:Staff WriterColombo (LNW): Sri Lanka’s manufacturing sector continued its downward trend in June this year amidst expansion of services, Central Banks purchasing mangers index indicated.
Manufacturing PMI recorded an index value of 47.3 in June 2023, indicating the setback in manufacturing activities. This setback was contributed by subdued performance observed in all the sub-indices.
Production and New Orders declined, mainly driven by the manufacture of textile and apparel sector. As mentioned by many respondents, continued subdued global demand was the major reason for this decline, CB stated.
However, some improvement in New Orders and Production was observed in the manufacture of food and beverages sector with the reduction of prices by some manufacturers to increase the market demand. Employment and Stock of Purchases also decreased in line with the decline in New Orders and Production.
Many respondents mentioned that they tend to replace only the essential staff and also to maintain a minimum raw material stock.
Meanwhile, Suppliers’ Delivery Time remained shortened in June 2023 with the low order volumes during the month. Expectations for manufacturing activities for the next three months indicated an improvement, anticipating a gradual recovery in economic conditions.
Purchasing Managers Indices indicated an expansion in Services activities and a contraction in Manufacturing activities in June 2023.
Services sector PMI increased further in June 2023 recording an index value of 56.7, the highest reading since January 2022.
This was led by the increases observed in New Businesses, Business Activities and Expectations for Activity. Nevertheless, Backlogs of Works continued to decrease, while employment remained unchanged during the month.
New Businesses increased in June 2023 compared to May 2023 particularly with the increases observed in financial services, other personal services, insurance and professional services sub-sectors.
Business Activities experienced a continuous growth in June 2023 with improvements across most of the sub-sectors.
Accordingly, financial services sub-sector showed improvements driven by the gradual decrease in market interest rates. In addition, other personal services, education and professional services sub-sectors also exhibited positive developments during the month.
Nevertheless,wholesale and retail trade sub-sector experienced a continued decline in business activities, though there was some improvement in clothing and footwear businesses due to Hajj season.
Backlogs of Work also decreased at a higher rate during the month,while Employment remained unchanged from the level reported in May.
Expectations for Business Activities for the next three months continued to improve in June amid anticipated improvements in economic activities driven by policy rate cuts, strengthening of SriLanka Rupee, relaxation of import restrictions and moderation of inflationary pressures.