June 17, Colombo: According to the Sri Lanka Purchasing Managers' Index (PMI) released by the Statistics Department of Central Bank on Tuesday, the industrial production in Sri Lanka recovered in May 2019 while services sector continued to deteriorate.
Manufacturing activities recovered to an index value of 50.7 in May 2019 which is an increase of 9.7 index points, compared to April
The recovery of manufacturing PMI is mainly attributable to the significant increase in Production and New Orders, especially, in manufacturing of textiles, wearing apparels, leather and related products, the Bank said.
Increase in production was mainly attributable to the fulfilment of accumulated orders using extra hours of factory operations. Many respondents, especially in textile and apparel sector, highlighted that they had to work extra hours on week days as well as in weekends during the month to clear the backlog of orders.
Employment contracted as a slight decline in new recruitments was observed, particularly, in manufacturing of food and beverages sector.
All sub-indices of PMI Manufacturing except for Employment and Stock of Purchases recorded values above the neutral 50.0 threshold signaling an overall expansion in manufacturing activities in May 2019 compared to April 2019.
Services sector declined further to an index value of 44.7 in May 2019 compared to previous month due to decline in Employment and Business Activity sub-indices, which was mainly caused by Easter Sunday attack.
Employment sub index recorded the lowest level since the commencement of the survey in May 2015 and it was mainly due to discontinuation of the service of contract employees with the deterioration in Business Activity.
Further, deterioration of Business Activity was also observed in the wholesale and retail trade, and transportation sub sectors.
Many respondents highlighted that uncertainty arose from Easter Sunday attack still prevails in the country. Thus, New Businesses and Expectations for Activity continued to decline compared to previous month, yet at a slower pace.
Prices Charged in the Services sector increased at a slower rate in May 2019 due to price discounts offered by hotels and other firms in accommodation, food & beverage, and other personal services sub sectors. Moreover, Expected Labor Cost for next three months increased at a higher rate in May 2019.