Manufacturing and services sector activities expand in July

Sri Lanka’s manufacturing and services sector activities measured by Sri Lanka Purchasing Managers’ Index (PMI) expanded in the month of July, albeit at a slower rate, according to the Central Bank of Sri Lanka.

The manufacturing sector PMI recorded 54.3 in July, which is a decrease of 1.8 index points compared to June 2017, mainly driven by the decrease in the Stock of purchases sub-index resulting from the usage of excess stock that was built up in the previous month and decrease in the Employment sub-index due to the difficulties in replacing unskilled employees to account for high labour turnover. 

New orders and Suppliers’ delivery time sub-indices moderated during the month while the Production sub-index remained at the same level. 

However, all the sub-indices of PMI recorded values above the neutral 50.0 threshold signalling an overall expansion in July.  Moreover, the Expectation for activities indicates an improvement for the next three months.

Meanwhile, the services sector PMI recorded 59.1 index points in July from 59.2 index points in June 2017.  This indicates that the services sector continued to expand in July 2017 driven by Business Activity and Employment sub-indices albeit with a marginal deceleration compared to June 2017. Backlogs of Work also declined, compared to June 2017.  Financial sector contributed to the expansion in New Businesses through introduction/expansion of technological reach to serve their clients and to improve efficiency of their services. 

Further, an increase in Business Activity was observed, mainly in the Accommodation, Food and Beverage sector due to increase in tourist arrivals and positive expectations for next 3 months. 
Prices Charged index experienced a decline in July compared to June 2017 in the absence of any festival demand. 

However, National Transport Commission increased the bus fare by 6.28 percent as per the annual bus fare revision. Meanwhile, Expectations on Labour Cost index declined in July 2017. 


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