May 17, Colombo: Sri Lanka's manufacturing sector slowed down in April 2018, compared to the previous month, while the Services Sector expanded albeit slowly, the Central Bank's Purchasing Managers' Index (PMI) Survey released for the month showed.
According to the survey, the Manufacturing PMI recorded 45.5 index points in April 2018 declining 20.1 index points in March while the Services Sector PMI recorded 53.2 index points in April 2018 declining from 58.0 index points recorded for the previous month.
The new year holidays in April dragged back the manufacturing activities following the peak level of activities observed in the previous month, and was in line with the pattern observed in previous years, the Central Bank said.
The contraction of PMI in April was largely attributable to the contraction in the Production and New Orders sub-indices. Stock of Purchases and Employment sub-indices also decreased during the month. Moreover, lengthening of the Suppliers’ Delivery Time sub index slowed down during the month which partially indicates that suppliers are less busy.
Respondents highlighted that increase in unauthorized absentees following new year holidays disturbed the manufacturing activities. Moreover, respondents, especially in the Textiles and Apparel sector, highlighted difficulties in finding both skilled and unskilled workers.
However, the Expectation for activities indicates an improvement for the next three months.
Services sector activities expanded at a moderate pace and reached an all-time low in April 2018, with a softer growth in New Businesses and Business Activity.
The Bank said as usual, the Services sector generally experiences a slower growth in April compared to March. Some respondents attributed this to higher number of holidays in April 2018.
The slower rate of expansion in both New Businesses and Business Activity were mainly observed in Real Estate,
Telecommunication and Accommodation, Food and Beverage sectors.
However, expectations for activity remained strong, reflecting optimism on the near-term Business Outlook.
Prices Charged of the Services sector increased owing to higher demand during the festival season, depreciation of the Sri Lankan rupee, expectations for a pricing formula for fuel and recent revisions to the tax structure.
Meanwhile, Expected Labour Cost increased at a slower rate due to realization of expected salary increments that was due in April 2018.