Both manufacturing and service sectors of Sri Lanka slowed down in October 2017, compared to the previous month, the Central Bank’s Purchasing Managers’ Index (PMI) Survey released for the month showed.
According to the survey, the Manufacturing PMI decreased by 4.2 index points to 54.8 in October 2017 from the previous month while the Services Sector PMI eased by 1.7 points to 55.3 in the month.
Manufacturing activities expanded at a slower pace in October compared to September 2017 mainly due to the moderation of the New Orders and Employment sub-indices from the levels of increase observed in the previous month.
The Production and Stock of Purchases sub-indices also expanded at slower rates in October. Meanwhile, the Suppliers Delivery Time sub-index lengthened at a higher rate which was led by lengthening of delivery time of overseas suppliers due to the high demand for their supplies from other countries.
Overall, all the sub-indices of PMI recorded values above the neutral 50.0 threshold signaling an overall expansion in October 2017, but at a slower pace than the previous month. Moreover, the Expectation for activities remain positive for the next three months.
The Services Sector PMI recorded 55.3 index points in October from 57.0 index points in September 2017 indicating that the sector continued to expand in October 2017 at a slower rate compared to September 2017.
Business Activity accelerated while New Businesses and Expectations for Activity decelerated in October compared to September 2017. For the same period, Employment and Backlogs of Work declined.
The increase in Business Activity was mainly observed in Financial Services and Telecommunication sectors, reasons being expansion of delivery channels and technology based improvements. Employment declined for the second time since the survey began in May 2015, due to non-recruitment for vacancies of retired employees and reduction in the number of casual staff mainly in the Accommodation, Food and Beverage sector.
Prices Charged increased at a slower rate in October compared to September 2017 while a decline in Prices Charged was observed in the Accommodation, Food and Beverage sector. Expected Labour Cost increased in October 2017 due to seasonal benefits such as bonuses and festival advances.