(LANKAPUVATH | COLOMBO) –Both manufacturing and service sectors of Sri Lanka expanded further in November 2021, the Central Bank’s Purchasing Managers’ Index (PMI) Survey released Wednesday showed.
Benefitting from the normalizing of economic activities in the country, the Manufacturing PMI continued to expand in November 2021 and recorded an index value of 61.9.
The significant increases in Production, New Orders, and Stock of Purchases sub-indices were mainly contributed to this improvement in the PMI, the Bank said.
A significant increase was observed in New Orders, particularly in the manufacture of food & beverages sector. Many respondents in this sector mentioned that they secured more orders in November 2021 than the previous month, for the upcoming festive season.
Further, Production, especially in the manufacture of textile and wearing apparel sector increased during the month.
Many respondents in this sector highlighted that their production levels were able to increase in November 2021 catering to the seasonal demands.
Meanwhile, Employment expanded at a slower rate compared to the previous month.
The Stock of Purchases increased in line with the improvement in New Orders and Production, and some respondents in the manufacture of textile and wearing apparel sector highlighted that they increased purchases, anticipating supply-side disruptions due to upcoming Chinese new year holidays.
Meanwhile, Suppliers’ Delivery Time lengthened at a slower rate in November 2021.
The continuous increase in the cost of imported raw materials, mainly due to rising global commodity prices, has been highlighted as a major concern by most of the respondents in all sub-sectors.
In the next three months, expectations for manufacturing activities remain at higher levels anticipating further improvements in economic condition locally and globally.
Services sector PMI registered an index value of 62.1 indicating a further solid performance in November 2021
This increase was underpinned by the increases observed in New Businesses, Business Activities, Employment and Expectations for Activity sub-indices.
New Businesses rose in November compared to the previous month mainly with the improvements observed in financial services and transportation sub-sectors.
Meanwhile, Business Activities increased for the second consecutive month stemmed from further recovery in demand following change in consumer sentiments amid relaxed pandemic related restrictions and upcoming festive season.
Accordingly, business activities improved in most of the subsectors, where major improvements were observed in financial services, transportation, wholesale and retail trade and other personal activities sub-sectors.
Nevertheless, as mentioned by few respondents, business activities in the services sector continued to be affected by supply side constraints amid import related issues and increase in input cost.
Improved confidence levels on expected developments in business activities led employment to increase in November 2021 for the first-time since March 2021.
Meanwhile, Backlogs of Work continued to decline in November in line with staff reporting to work as usual.
The level of optimism on Business Activities for the next three months grew at the highest pace since November 2019 amidst relaxed pandemic related restrictions and upcoming festive season. Nevertheless, some respondents were concerned on the possible negative impact of the new variant of COVID-19 on their business operations.