PMI indicates dull business activity in May

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The Sri Lanka Purchasing Managers Index recorded a value of 50.3 in May 2022. Though it is an increase of 13.9 index points compared to April 2022, it still remains low, compared to figures recorded in earlier months. Manufacturing PMI in January 2022 was 58.7, February at 52.5, and March at 57.8. April 2022 recorded a low value of 36.4, however, April is traditionally a month of low business activity.

The slight edging up of the PMI was mainly due to recovery of Employment and lengthening of Suppliers’ Delivery Time. Even though the lengthening of Suppliers’ Delivery Time generally reflects expansion in manufacturing activity, in this instance it was primarily due to supply side impediments arising from clearance delays of imported goods and fuel shortage, the Central Bank said.

May figures indicate deterioration of purchasing power compared to previous months, which is a result of high inflation, together with cautious consumer spending. Prolonged uncertainty over economic woes resulted in reduced demand, particularly for non-essential goods.

The Services PMI dropped marginally to 42.4 in May 2022, indicating a contraction in service activities for consecutive months, mainly due to a decline in new businesses and business.

In November 2021, the Services Sector PMI was at 62.5, which declined to 57.5 index points in January 2022, which has further declined by May 2022.

“Civil unrest which occurred at the beginning of the month also had a negative effect on business activity. Thus, wholesale and retail trade, other personal activity, and transportation sub-sectors recorded major declines during the month. In addition, business activity of accommodation, food and beverage sub-sector were also affected by the continued drop in tourist arrivals,” a Central Bank statement said.

By Rajiesh Seetharam