Oct 16, Colombo: According to the Sri Lanka Purchasing Managers' Index (PMI) released by the Census and Statistics Department, the industrial production and services in Sri Lanka have eased in September 2018 compared to the same month in 2017.
The Manufacturing Sector PMI decreased to 54.1 index points in September 2018 from 58.2 index points recorded in August 2018.
The slowdown observed in manufacturing activities in September was mainly driven by the slowdown in new orders and production, especially in manufacturing of food and beverages activities.
Respondents highlighted that they had to increase their prices during the period due to increase in input cost of imported raw materials with rupee depreciation. This led to a decline in demand for their products, which in turn resulted in a decrease in new orders and production.
However, new orders and production of manufacturing of textiles, wearing apparel, leather and other related products, which are mostly export oriented improved during this period.
Overall employment and stock of purchases also slowed down. While lengthening of suppliers' delivery time usually indicates that economy is booming with expanding activities in the short run, lengthening of suppliers' delivery time in September was due to manufacturers' intentional increase of the lead time with the expectation of rupee stabilization. "Thus, it does not indicate an expansion in economic activities," the Department said.
Overall, all the sub-indices of PMI recorded values above the neutral 50.0 threshold signaling an overall expansion in September yet at a slower pace compared to the last month.
The Services Sector PMI declined to 53.0 index points in September 2018 from 57.0 index points recorded in August, recording the lowest index value since survey began in May 2015.
The slowdown in the Services sector was mainly due to the significant slowdown of Business Activities in accommodation food & beverage, wholesale and retail trade, health activities and other personal services sectors.
The off-peak season for Tourism, and slowdown in import volumes were cited as main reasons for the observed slowdown.
New Businesses growth also eased across financial services and insurance sectors. Employment levels expanded at a slower rate in September which was partly due to slowdown in Business Activities.
Service providers' outlook on the three months business activities strengthened, yet at a slower pace.
Upward revisions to fuel prices, depreciation of local currency and restrictions on imports were cited by respondents to have adversely affected their optimism.
Prices Charged of the Services sector increased at a higher rate owing to upward revisions to fuel prices and depreciation of local currency during the month. Expected Labor Cost in the services sector also increased during September 2018.