August 26, 2019
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    Manufacturing, services expand moderately in January moderately in January

    February 16, 2019

    According to the Sri Lanka Purchasing Managers' Index (PMI) released by the Statistics Department of Central Bank, both manufacturing and service sectors continued expand moderately in January 2019.According to the survey, the Manufacturing PMI increased by 0.7 index points to 54.4 in January 2019 while the Services Sector PMI Increased by 1.1 index points to 55.8 compared to December 2018.

    Manufacturing activities expanded at a higher rate in January 2019 compared to December 2018 driven mainly by the expansion in employment and production, especially in manufacturing of textiles, wearing apparels, leather and related activities.A significant improvement in employment was experienced with the recruitment of new employees to fill the vacancies. Accordingly, the production also increased with the enhanced level of employment as well as the orders carried forward from the previous month.

    However, with the end of festive seasonal demand, new orders decreased. Stock of purchases also decreased in line with the low demand for new orders and availability of stocks of raw materials carried forward from the previous month. The suppliers' delivery time lengthened slightly due to logistical issues experienced at the latter part in January 2019.

    All sub-indices of PMI Manufacturing recorded values above the neutral 50.0 threshold signaling an overall expansion in manufacturing activities in January 2019 at a higher pace compared to December 2018.Services sector growth accelerated in January 2019, underpinned by a strong upturn in Employment, New Businesses and Expectations for Activities. Employment sub index reached a seven-month high in January 2019 due to recruitments for filling vacant positions, which were delayed in December 2018.

    Respondents in education; and postal and courier activities sub sectors cited that their new businesses were expanded in January 2019 due to intake of new batches and increase in gift deliveries for the new year. Expectations for Activities also expanded as service providers expect that the new budget would provide some stimulus to the local economy.However, passive expansion in Business Activity at the beginning of the year could be due to seasonality, as the activity level in January 2019 is compared with a strong activity level in December 2018, which was a festive season and peak season for tourism.

    Prices Charged of the Services sector increased at a slower rate in January 2019 due to stabilization of the local currency value, while the expected Labour Cost in the services sector increased at a higher pace as annual increments are due in April.

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