Sri Lanka’s manufacturing activities saw a recovery in the month of May, following a prolonged holiday season in April, while services sector activities also showed a modest acceleration.
According to the Sri Lanka Purchasing Mangers’ Index (PMI) compiled by the Central Bank, the manufacturing sector PMI recorded 57.9 in May, which is an increase of 16.1 index points compared to April 2017. “This indicates that the manufacturing activities recovered in May 2017, largely attributable to the expansion in production and new orders sub-indices, following the seasonal contraction observed for the month of April 2017,” the Central Bank said.
Further, all the sub-indices of PMI apart from the employment sub-index recorded values above neutral 50.0 threshold.
However, adverse weather conditions experienced from 25th day of the month slowed down the expected recovery of the operations due to employee absenteeism and lengthening of the suppliers’ delivery time. Nevertheless, the expectation for activities indicates an improvement for the next three months, the Central Bank said.
Meanwhile, the services sector PMI recorded 55.3 index points in May from 54.2 index points in April 2017.
“The moderate acceleration in the services sector was supported by new businesses, business activity and employment. A recovery of employment was observed in May following the contraction observed in April 2017,” the Central Bank said.
Expectations for activity decelerated in May due to reasons such as adverse weather conditions and pacing out of peak and festive seasons in certain sub sectors.
Backlogs of work declined, continuing the trend observed since the survey began.
Prices charged decelerated in May 2017 with the decline in demand compared to April.
Expectations on labour cost also moderated in May 2017 following the annual increments accommodated in April.