By: Isuru Parakrama
Colombo (LNW): Sri Lanka’s manufacturing sector has dipped in subdued performance with the textile and apparel sector struggling in lack of new orders while new businesses boosted biz activities increasing employment expectations, Central Bank announced.
The reserve money decreased compared to the previous week mainly due to the decrease in the deposits held by the commercial banks with the Central Bank.
The total outstanding market liquidity was a deficit of Rs. 62.913 bn by 18th August 2023, compared to a deficit of Rs. 145.939 bn by the end of last week.
During the six months ending June 2023, government revenue and grants increased to Rs. 1,317.1 bn compared to Rs. 919.5 bn. Total expenditure and net lending increased to Rs. .2,559.6 bn during the period from January-June 2023 compared to Rs. 1,822.1 bn recorded in the corresponding period of 2022.
The Central Bank said the dip in both production and new orders was primarily due to several factors, including a decrease in market prices.
This decline occurred despite efforts to reduce prices. Notably, manufacturers in the textile and wearing apparel sector faced challenges; as they grappled with the lack of new orders stemming from fierce competition in the global market and unfavorable demand conditions.
Alongside the decline in new orders and production, employment and stock of purchases also experienced a decrease throughout the month.
Companies were found to be primarily filling essential vacancies; leading to a reduction in overall employment numbers in July. Meanwhile, suppliers’ delivery time remained shortened compared to the previous month.
Although the immediate manufacturing outlook appears challenging, the Central Bank said the expectations for the sector over the next three months indicated a marginal improvement, taking into consideration the current economic environment.
On a contrasting note, the services sector demonstrated resilience underscoring the ongoing expansion in services activities, Central Bank claimed.
This growth was fuelled by increases in new businesses, business activities, employment, and expectations for activities. The only exception was backlogs of work, which continued to contract during the month.
Accommodation-related services, financial services, other personal services, and professional services sub-sectors saw a prominent rise in new businesses. July also witnessed consistent growth in business activities across multiple sub-sectors.
It said the surge in tourist arrivals boosted accommodation-related services, while the financial services sub-sector saw improvement due to decreasing market interest rates. Personal services and professional services sub-sectors also noted positive developments.
In a significant turn of events, the Central Bank said employment within the services sector registered an increase, marking the first upward movement in 15 months, attributed to ongoing recruitments at various companies.
While backlogs of work continued to decrease, the rate of contraction slowed down during the month.Expectations for business activities in the services sector over the next three months remained positive due to the prevailing favourable economic conditions.