Sri Lanka’s Manufacturing growth marginally slows at beginning of Q3

Aug 17, 2018 (LBO) – The Manufacturing Sector PMI decreased to 57.2 index points in July 2018 from 57.6 index points observed in the previous month, a statement from the Central Bank said.

The marginal slowdown observed in manufacturing activities in July was mainly driven by slowdown in employment due to the difficulties in replacing unskilled employees to account for high labour turnover especially in the Food and Beverages, and Textiles and Apparel sectors, it said.

“Moreover, new orders in July 2018 slightly slowed down.”

However, production and stock of purchases show some improvement, especially in manufacturing of chemicals and pharmaceutical products with the expected positive outlook for the next three months.

Meanwhile, lengthening of suppliers’ delivery time usually indicates that economy is booming with expanding activities in the short run.

However, in this instance, suppliers’ delivery time lengthened due to scarcity of raw materials in the world market and unfavourable weather conditions. Thus, it does not indicate an expansion in economic activities.

Overall, all the sub-indices of PMI recorded values above the neutral 50.0 threshold signalling an overall expansion in July albeit at a slower rate during the month. Meanwhile, the Expectation for activities indicates an improvement for the next three months.