Sri Lanka manufacturing PMI down in July, services marginally up
ECONOMYNEXT – Sri Lanka’s manufacturing Purchasing Managers’ Index fell in July compared to June, while services contracted mainly in transportation, real estate and accommodation, food and beverage sectors as the fuel crisis peaked in the country, the central bank said.
The manufacturing PMI declined to 41.4 from 44.1 with the contraction of manufacturing activities due to a drop in consumer demand as prices rose in the country while the fuel shortage affected people’s purchasing power.
“The decline in New Orders in July 2022 over the previous month was mainly due to subdued demand conditions, particularly in the manufacture of food & beverage sector,” the central bank which compiles the index said.
“Deterioration of consumer purchasing power and reduced retail footfall due to fuel shortage were among the major reasons for the subdued demand condition.”
Production has also declined on a month-on-month basis, the report noted.
“Particularly in the manufacture of food & beverage sector, which was a combined outcome of subdued demand conditions and supply side concerns such as shortage of materials and fuel.”
Hence the manufacturing sector expectations for the next three months are negative due to subdued demand and supply-side constraints.
The Services PMI improved to 43.0 in July from 40.3 in June however at a slower pace.
“New Businesses contracted further in July 2022 compared to June 2022, particularly with the deteriorations observed in
transportation, real estate and accommodation, food and beverage sub-sectors,” the statement said.
“Business Activities dropped further in July with the decreases observed across most of the sub-sectors amid the severe fuel shortage experienced during the month.
The services sector had been faced with other supply-side constraints such as “the subdued demand, driven by weakened economic conditions, price escalations and travel limitations also affected the business activities in the services sector negatively.”
Hence transportation, accommodation, food and beverage and other personal activities sub-sectors had recorded considerable deterioration during the month.
Employment too had fallen in July due to a freeze in new recruitments and the non-renewal of existing employment contracts.
(Colombo/Aug16/2022)
