Manufacturing growth slows, services accelerate to 24-month high in Dec
ECONOMYNEXT- Sri Lanka’s manufacturing sector growth slowed in December from a month earlier, while services accelerated to a 24-month high, the central bank said.
The Purchasing Managers’ Index (PMI) compiled by the central bank showed the manufacturing sector PMI at an index value of 54.3 for December. An an index value over 50 indicates a growth from the earlier month.
However, the growth was with the index falling 1.7 index points from of 56.0 in November, owing to slower expansion in new orders, production and stock of purchases.
” All the sub-indices indicated an expansion, yet at a slower pace, compared to November 2019,” a Central Bank statement said.
“New Orders and Production expanded at a slower rate owing to the slowdown in manufacturing of textile and wearing apparel sector.”
“A significant slowdown in employment was experienced, particularly in manufacturing of wearing apparel sector as potential employees were attracted to seasonal jobs for better remuneration. This slowdown in employment partly impacted the slowdown in production.”
Meanwhile, amid sluggish growth in new orders and production, businesses were seen increasing their stocks of inputs, as stock of purchases expanded at a higher rate.
Sri Lanka’s suppliers’ delivery time however, remained at the neutral level indicating that it remains as same as in the previous month.
While Sri Lanka’s manufacturing PMI grew, the global PMI barely reached 50.1 also declining 0.2 index points from a month earlier, with a slowdown in UK, the Eurozone and China.
Sri Lanka’s service sector PMI grew 2.8 points to 60.2 from November, reaching a 24-month high.
The central bank said the boost in services sector was supported by a strong expansion in new businesses and business activity due to seasonal movement, political stability and state measures taken to improve the economy.
“Business activities in wholesale and retail trade, and accommodation, food & beverage sub sectors posted a strong growth due to the festive season and peak season of tourism.”
“Transportation of goods recorded a growth with increased transshipment volumes while other personal services such as leisure activities also improved with the holiday season.”
However, services sector employment continued to remain below the 50.0 index points threshold level due to delays in filling vacant positions and replacing labour shortages with tech-savvy solutions.
The statement also said that this was the ninth consecutive month of the slowdown of the rate of job creation.
“Expectations for activity increased, yet at a slower pace, compared to the previous month. Respondents cited that they expect a higher growth in their business underpinned by new tax revisions.”
The global services PMI grew marginally to 52.1 points in November with improved growth in services output in US, India and China, as well as a decline seen in Japan.