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Sri Lanka manufacturing, services rebounds sharply in May from Coronavirus plunge: PMI

ECONOMYNEXT – Manufacturing activity has rebounded strongly in May 2020 as Sri Lanka emerged from a Coronavirus crisis with some firms switching products, while services also started to recover, a Purchasing Managers Index compiled by the central bank showed.

Hotels were still down in services and companies were not replacing retirees, leading to a tick up in unemployment.

Manufacturing PMI rebounded to 49.3 points in May after plunging to a record low of 24.2 in April as Coronavirus lockdown gripped the country. A global PMI index showed a gain of 2.6 points to 42.4 in May.

A production sub-index had bounced back to 51.1 in May from 3.5 in April with volumes rising gin food, beverages, textiles, and apparels.

“The gradual easing of restrictions for mobility has contributed to the resumption of economic activities in the manufacturing sector,” the Central Bank said.

“Further, New Orders, Stock of Purchases, Employment sub-indices also improved during the month of May 2020, yet remained below the neutral level.

“Meanwhile, Suppliers’ Delivery Time lengthened at a slower pace during the period signalling a softening of stress on supply chain.”

Many companies in textile, apparel, chemicals had said they had switched to health and safety related products as they had no orders for regular products.

The Services sector PMI also gained to 43.1 points in May to 29.8 in April.

“This increase was underpinned by increases observed in New Businesses, Business Activities and Expectations for Activity sub-indices, ” the Central Bank said.

Transport, wholesale and retail trade had improved with the lifting of restrictions.

But hotels and tourism and food and beverages had declined amid restrictions on hotel operations and zero foreign arrivals.

“Further, respondents in Services sector are optimistic on future business activities with the expected revival of economic activities aftermath of COVID-19 pandemic,” the central bank said.

“However, Employment declined in May 2020 compared to previous month due to halt of new recruitments amidst retirements.” (Colombo/June16/2020)