Sri Lanka’s manufacturing sector contracted significantly in September with the decline of people’s purchasing power meanwhile services sector has marginally expanded, according to a Purchasing Managers’ Index compiled by the central bank.
The manufacturing PMI has remained below 50 consecutively and in September it’s at 49.6 percent.
For the next three months, the overall expectations for manufacturing activities deteriorated in September 2022, anticipating demand side impediments to be intensified in the coming months.
“Many respondents representing manufacturing firms primarily catering to the domestic markets, including the manufacture of food & beverages, mentioned that the decline in demand was due to the deteriorating purchasing power of the consumers,” the central bank said.
“Further, manufacturers in the export-oriented industries mentioned that they experienced a weaker demand mainly due to the fear of recession in the major export destinations.”
The report said there had been an improvement in seen in the manufacture of the textile and apparel sector.
The sector had also continued recruitment despite the gloomy outlook in the market.
The Stock of Purchases had decreased too in line with the decline in New Orders and Production while the Suppliers’ Delivery Time lengthened slightly in September 2022.
“Some respondents mentioned that they continuously experience difficulties in sourcing raw materials due to lower foreign exchange availability, although some recent improvement has been witnessed,” the report said.
Employment continued to fall in September due to increasing resignations and retirements besides a halt in new recruitments.
The Services PMI recorded an index value of 51.2 in September 2022, indicating a marginal expansion in the services sector driven by the increases observed in New Businesses, Business Activities and Expectations for activity, the report said.