Upcoming festive season drives economic activities across manufacturing and services

The upcoming festive season gave an additional boost to the already expanding activities across the economy, as both manufacturing and services activities continued to grow through February. This is as the firms are gearing up for the coming Sinhala and Tamil New Year.

Accordingly, the Purchasing Managers’ Index (PMI) for manufacturing and services recorded index values of 56.8 and 56.5, respectively for February, reflecting continuous expansion in the activities.
This was however some slowdown from 59.0 and 58.5 for the two sectors in January.

In the PMI, an activity is split between an expansion and a contraction at 50.0 and if an activity has an index value of 50.0, then it says such activity has neither contracted nor expanded.

The manufacturing sector has predominantly been driven by the food and beverage sector, which is gearing up for the upcoming festive season.

This was reflected from the expansions in both new orders and production sub-indices in the food and beverage sector, the survey said. Further, the sector has continued to hire people to work in the sector, in a sign that the growing activities are generating job opportunities, most of which may perhaps be the ones lost during the economic crisis.

“Employment and stock of purchases also expanded, indicating proactive adjustments to accommodate the growing demand,” the survey conducted by the Central Bank said.

Meanwhile, the services sector activities have been driven by many sectors from the financial services to wholesale and retail trade to education. Further, the real estate, professional services, accommodation, food and beverage, insurance and other personal services too have shown an expansion during the month from a month before.
The financial services have been driven up mostly by the increased lending activities, which was made possible by the lower lending rates.

As a result, there have been a lot of new business activities, which have taken place.

Further, the employment in services too has continued to increase, as many firms have resorted for hiring in view of the festive season.

The expectations remain high for both manufacturing and services, particularly due to the upcoming festive season, the survey results showed.