- Manufacturing PMI slows to 54.3 from 58.2 in Oct.
- Political uncertainty weighs on respondents’ expectations
Sri Lanka’s Purchasing Managers Index (PMI) fell in November mainly due to the slowdown in new orders in textile and wearing apparels while the heightened political crisis soured the expectations in the services sector.
Accordingly, the manufacturing sector PMI slowed to 54.3 from 58.2 in October largely due to slowdown in new orders and production, especially in manufacturing of textiles and wearing apparels.
“However, new orders and production in the manufacturing of food and beverages activities have improved with the Christmas season demand,” the Central Bank said.
Meanwhile, the services sector expansion eased in November with an index value of 52.6, down from 55.5 in October.
The slowdown in the services sector PMI was mainly due to the, “record low index value reported for ‘expectation for activity,’” the Central Bank said. Further, a notable slowdown was also observed in ‘new business’ and ‘employment’ sub-sectors in November.
“The current political situation in the country and uncertainty on future policies weighed on respondents’ expectations for activity and growth in new businesses”, the Central Bank said.
President Maithripala Sirisena sacked the then Prime Minister Ranil Wickremesinghe on October 26 and appointed the former President, Mahinda Rajapaksa in his place and dissolved parliament calling for snap elections to form a stable government.
However, Sirisena’s actions were challenged in the courts by the United National Front led coalition, bringing the country into a political paralysis, which may have soured the expectations of the businesses.
However, the political crisis was believed to have ended last week after the country’s highest court ruled that President Sirisena’s move to dissolve parliament was unconstitutional.
The ruling followed the resignation of Rajapaksa and the reappointment of Wickremesinghe as the Prime Minister.
“However on a positive note, business activities of wholesale and retail trade and accommodation, food and beverage sub-sectors reported a growth due to the upcoming festive season and the peak season for tourism,” the Central Bank said.
The PMI measures the general health of business activities in an economy. An index value above 50 indicates an expansion in the activities.