- New data points to a strong revival in both manufacturing and services sectors
- Significant increases in new orders in food, textile and apparel
- Supply deliveries improve as shipping issues resolved
- Services PMI improves for 4th consecutive month
Indicating a strong revival in manufacturing activities in the country, the manufacturing PMI reached a 9-month high of 67 in March, the Central Bank said in its latest report.
This was largely attributable to the increases observed in Production, New Orders, and Stock of Purchases sub-indices.
The significant increases in New Orders and Production sub-indices, particularly in the manufacture of food and beverages, and textile and wearing apparel sectors, have mainly contributed to the improvement in the overall index.
Many respondents in the manufacture of the food and beverages sector highlighted that they experienced higher levels of sales and production during March, ahead of the New Year festival season. Further, respondents from the textile and wearing apparel sector mentioned that they increased production during the month to cover-up seasonal holidays.
Meanwhile, the Stock of Purchases sub-index increased in line with the expansion in New Orders and Production. The Employment sub-index also expanded at a higher rate. The Suppliers’ Delivery Time sub-index lengthened at a slower pace during the month. Many respondents highlighted that some easing in suppliers’ delivery time was experienced with the gradual resolution in shipping-related issues.
However, freight rates remain at elevated levels, increasing the cost of raw materials, which in turn adversely affected their profit margins.
Expectations for manufacturing activities in the next three months remained at improved levels, anticipating a further improvement in economic activity within the country as well as in major export markets.
Services PMI rose to 62.1 in March, indicating an expansion of the services sector for a fourth straight month. This increase was underpinned by the expansions observed in new businesses, business activities, employment and expectations for activity.
New businesses in the services sector increased in March, particularly with the improvements observed in financial services, other personal services, and wholesale and retail trade sub-sectors.
For the fourth straight month, the business activities in the services sector increased in March, with increases observed almost across all sub-sectors. Mainly, the financial services sub-sector recorded a further improvement during the month in line with the progresses in economic activities. With the festive season, wholesale and retail trade, and transportation sub-sectors also expanded further.
Moreover, other personal services sub-sector also experienced an increase in March. Meanwhile, the education sub-sector continued to expand amid the increased demand for higher education following G.C.E. Ordinary and Advanced Level examinations.
Employment increased in March for the first time after declining for 13 consecutive months due to new recruitments amidst growing business activities.
Backlogs of work decreased in March for the second month in a row, in line with the increase in staffing levels, which were previously at a low level due to COVID-19-related health concerns. Expectations on business activities for the next three months increased further in March underpinned by the optimistic expectations on growth prospects amidst the Sinhala and Tamil New Year and Ramadan.