17 June 2020 08:53 am
Sri Lanka’s manufacturing and service sectors made notable rebounds in May after hitting the rock bottom in April as the country started to gradually relax COVID-19 related mobility restrictions in the month, according to the Purchasing Managers’Index (PMI) published by the Central Bank (CB).
Manufacturing sector PMI recorded a noticeable jump in May reaching 49.3, an increase of 25.1 index points, recovering from the all-time low of 24.2 recorded in April in the peak of COVID-19 outbreak in the country.
“The gradual easing of restrictions for mobility has contributed to the resumption of economic activities in the manufacturing sector,” the CB stated. In the month, the apparel and textile manufacturers switched to produce some alternative products such as personal protective equipment (PPE) relating to health and safety as their regular orders become virtually non-existent.
The manufacturers remain cautiously optimistic on the activities for the next three months amid COVID-19 pandemic.
“The overall expectations for manufacturing activities for the next three months significantly increased compared to the previous month, yet the manufacturers are still concerned that COVID-19 pandemic would continue to affect consumer demand,” the CB noted.
The production sub-index reported an index value of 51.1 in May compared to mere 3.5 reported in April, reflecting a significant expansion in volume produced, particularly in manufacturing of food, beverages and manufacturing of textiles, wearing apparels sectors.
In May, suppliers’ delivery time lengthened at a slower pace signalling a softening of stress on supply chain, as manufacturing activities in China rebounded.
Similarly, the services PMI rebounded significantly to 43.1 in May from a record-low of 29.8 in April with the relaxation of domestic travel restrictions, which had been imposed to control the spread of COVID-19 pandemic.
In particular, business activities of transportation, wholesale and retail trade, professional services and telecommunication sub-sectors showed an improvement In May over the previous month with the normalisation of business activities.
However, business activities related to tourism industry including accommodation, food and beverage sub sector declined owing to restrictions imposed on hotel operations and zero international tourist arrivals for the second consecutive month.
The business activity sub-index rose by over 25 index points to 34.2 in May. However, employment sub-index declined by further six index points in the month compared to April.
New businesses sub index also made a substantial gain in May compared to April owing to improvements in new businesses in transportation and wholesale and retail trade sub-sectors with the lift of domestic travel restrictions.
The CB said that the services sector has become optimistic on future business activities with the expected revival of economic activities.
A similar trend was observed globally driven by resumptions of economic activities in China, the initial epicentre of COVID-19 pandemic.
Although, both manufacturing and services PMI recorded notable gains in May, it still remained below the levels seen in May last year in the immediate aftermath of Easter Sunday attacks.