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Wednesday May 18th, 2022
Economy

Sri Lanka factories hurt by import disruptions amid recovery: PMI

ECONOMYNEXT – Sri Lanka’s manufacturing sector continued to recover in December 2021 but was hit by import disruptions and services sector also expanded, a Purchasing Managers’ Index compiled by the central bank showed.

The PMI for December was 58.1, above 50 percent only slightly down from 61.9 in November.

“The expansion in New Orders and Production was mainly driven by seasonal demand for the food & beverage manufacturing sector,” the statement said.

“New Orders and Production in manufacture of textile and wearing apparel sector also showed an improvement, yet at a slower pace. However, Employment sub-index declined in December compared to November 2021.

“In the next three months, expectations for manufacturing activities remain at higher levels anticipating continuous improvements in economic condition locally and globally.

“Many respondents mentioned that although they wanted to build up stocks significantly ahead of the Chinese new year holidays, they were able to do it only to a certain extent due to import related issues.”

Sri Lanka is seeing forex shortages amid lost credibility of a 200 to the US dollar peg and sterilized reserves sales, through bond markets are now working.

Delivery times were also hit.

“Delays due to port congestions, increase in orders ahead of the Chinese new year holidays, shortage of local raw materials were among the major causes of lengthening the Suppliers’ Delivery Time.

Services sector PMI rose to 62.4 points in December.

Services sector PMI edged up to an index value of 62.4 in December marking a strong end to 2021. This increase was underpinned by the increases observed in New Businesses, Business Activities, Employment and Expectations for Activity sub-indices.

“New Businesses rose further in December compared to the previous month with the improvements observed across most of the sub-sectors,” the statement said.

“Accordingly, business activities improved across most of the sub-sectors, where major improvements were observed in financial services, transportation, wholesale and retail trade and other personal activities sub-sectors.

“Meanwhile, business activities in accommodation, food and beverage sub-sector also recorded a significant improvement amid the festive season and the considerable growth in international tourist arrivals.

“Employment rose further in December as companies continued to expand their workforce owing to the positive developments in their business activities. Meanwhile, Backlogs of Work continued to decline in December in line with staff reporting to work as usual.” (Colombo/Jan19/2021)

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