July 15, Colombo: Sri Lanka's services sector expanded significantly in June 2017 while the manufacturing sector showed a modest improvement from the previous month, the Central Bank's Purchasing Managers' Index (PMI) Survey released on Friday showed.
The Manufacturing Sector PMI recorded 56.1 in June which is a decrease of 1.8 index points compared to May 2017 while the Services Sector PMI accelerated to 59.2 index points in June from 55.3 index points in May 2017.
The slow expansion of the manufacturing activities in June 2017, is mainly due to the decrease in New Orders and Production sub-indices which were partly influenced by the adverse weather conditions. As a result, excessive stock levels were created and a marginal decline in lengthening of the suppliers' delivery time was experienced.
However, the Employment level improved recovering from the contraction experienced in the previous month. Further, all the sub-indices of PMI recorded values above the neutral 50.0 threshold signaling an overall expansion. Moreover, the expectation for activities indicates an improvement for the next three months.
The acceleration in Services sector was supported by New Businesses, Business Activity, Employment and Expectations for Activity. Backlogs of Work declined, at a moderate pace compared to May 2017.
Financial sector contributed to the acceleration in New Businesses through adoption of technological advancement to serve their clientele. An increase in Business Activity levels was reported, mainly in the health sector.
Accommodation, food and beverage sector expects an increase in activity levels in the next 3 months due to anticipated growth in both domestic and foreign tourist activities. Prices Charged index experienced no change in June compared to May 2017 in the absence of any festival demand. Meanwhile, Expectations on Labor Cost increased marginally in June 2017 due to the increase in the employment level.