Sri Lanka’s manufacturing and services activities expanded at a faster pace in January, continuing the momentum regained since November last year, as the two sectors received a boost from new businesses while the prospects for future activities further improved with the normalising of economic activities world over.
Purchasing Managers’ Indices (PMI) for both manufacturing and services expanded by 60.2 index points and 56.2 points in January, respectively, compared to 61.2 points and 55.6 points in December 2020.
In PMI, a reading of 50.0 or above indicates an expansion of activity.
“New Orders and production sub-indices remained at healthy levels especially in the manufacture of food and beverages sector, following the festival season. However, some respondents in this sector highlighted that lower than expected demand, due to the COVID-19 situation, affected the business activities,” the Central Bank said.
After a brief setback seen in October, due to virus-related lockdowns in key industrial regions of the Western province, manufacturing activities rebounded since November.
Meanwhile, employment expanded during January at a higher rate, with new recruitments but some manufacturers struggled to complete their production on time, due to the lack of employment availability, as a result of pandemic-related health concerns.
With or without the pandemic, Sri Lankan industries have been facing a labour shortage.
In another development in the manufacturing sector, the stock of purchase sub-index expanded faster “due to depleting of stocks previously held and intended accumulation of stocks for future requirements, anticipating supply disruptions, due to upcoming Chinese New Year holidays”, reminding the fact that the world still largely depends on China for goods.
Meanwhile, the services activities accelerated in January, with the help of “improvements observed in financial services, transportation and wholesale and retail trade sub-sectors,” the Central Bank said.
“The goods and passenger transportation sub-sector recorded an improvement during the month, with people adopting to the new normal environment. Business activities in the accommodation, food and beverage sub-sector improved further with the gradual recovery in domestic tourism, owing to the promotional discounts offered during the period,” the Central Bank added.