June 15, Colombo: Sri Lanka's manufacturing sector expanded significantly in May 2017 while the services sector showed a modest improvement from the previous month, the Central Bank's Purchasing Managers' Index (PMI) Survey released Thursday showed.
The Manufacturing Sector PMI recorded 57.9 in May which is an increase of 16.1 index points compared to April 2017 while the Services Sector PMI recorded 55.3 index points in May from 54.2 index points in April 2017.
The expansion in manufacturing activities in May 2017 is largely attributed to the expansion in Production and New Orders sub-indices following the seasonal contraction observed for the month of April 2017.
All the sub-indices of PMI apart from Employment sub-index recorded values above neutral 50.0 threshold. However, adverse weather conditions experienced from 25th day of the month slowed down the expected recovery of the operations due to employee absenteeism and lengthening of the suppliers' delivery time. Nevertheless, the expectation for activities indicates an improvement for the next three months.
The moderate acceleration in Services sector was supported by New Businesses, Business Activity and Employment. A recovery of Employment was observed in May following the contraction observed in April 2017.
Expectations for Activity decelerated in May due to reasons such as adverse weather conditions and pacing out of peak and festive seasons in certain sub sectors. Backlogs of Work declined, continuing the trend observed since the survey began. Prices Charged decelerated in May 2017 with the decline in demand compared to April. Meanwhile, Expectations on Labor Cost also moderated in May 2017 following the annual increments accommodated in April.