By: Staff Writer
Colombo (LNW): Sri Lanka’s manufacturing and services have rebounded strongly in March 2023 as the island nation is about to emerge from an economic crisis with the unlocking of US$ 3 billion IMF bail out loan, a Purchasing Managers Index compiled by the central bank showed.
As a consequence of economic and political stability, some firms have been switching products with new innovations while services also started to recover under the country’s foreign reserve boosting efforts.
Manufacturing PMI turned positive in March 2023, after nine consecutive survey rounds, recording an index value of 51.4.
This month-on-month expansion was driven by the increase in New Orders and Production sub-indices mainly due to the seasonal demand, Central Bank claimed.
However, Employment, Stock of Purchases and Suppliers Delivery Time sub-indices remained below the neutral threshold.
The increase in New Orders and Production was mainly driven by the manufacture of food & beverages sector, where many respondents mentioned that they experienced a relatively higher demand compared to previous months to cater for the upcoming festive season.
However, Employment continued to decline mostly due to non-replacement of retirements and resignations.
Further, Stock of Purchases declined in March as well, since some firms used their stocks of raw materials delaying new purchases with the anticipation of a decline in raw material prices in the period ahead.
Meanwhile, Suppliers’ Delivery Time was slightly shortened during the month. Services sector PMI returned to growth territory, recording an index value of 55.1 in March 2023 indicating an expansion across the services sector.
This was driven by the increases observed in New Businesses, Business Activities, and Expectations for Activity.
New Businesses increased in March 2023 compared to February 2023, particularly with the increases observed in financial services,insurance and professional services sub-sectors.
Business Activities in the services sector rebounded in March 2023 after observing a decline in the previous month.
Accordingly, the financial services sub-sector continued to improve with the increases in deposits, while other personal activities sub-sector also exhibited a significant improvement.
Meanwhile, human health, insurance, education and professional services sub-sectors also recorded slight increases during the month.
However, business activities related to the wholesale and retail trade sub-sector continued to deteriorate despite some improvements seen ahead of the festive season.
Employment continued to decline in March at a slower pace due toresignations, migrations and retirements occurred during the month despite few new recruitments to accommodate the seasonal demand.
Meanwhile, Backlogs of Work also decreased at a slower pace during the month. Expectations for Business Activities for the next three months improved in March at a higher pace amid improvements in economic conditions and finalization of IMF Extended Fund Facility Arrangement.
Nevertheless, several respondents continued to express their concerns over rising operational costs due to higher electricity tariffs, and increased tax rates CB report highlighted.
