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Sri Lanka manufacturing sector slides as services gain in April 2024

By: Staff Writer

May 16, Colombo (LNW): Companies, representing both the manufacturing and services sectors, have taken breather during the festive period this year with scale down their production activities.

According to the monthly survey conducted by the Central Bank, manufacturing sector firms in particular recorded a contraction in their production while service sector continued with slower expansion.

Sri Lanka Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 42.0 in April 2024, indicating a contraction in manufacturing activities following the seasonal pattern.

New Orders, Production, Employment and Stock of Purchases sub-indices declined during the month, resulting in an overall decline in the index.

As per the respondents, the decline in New Orders was mainly due to the end of the festive season’s demand, particularly for food & beverages.

Further, the decrease in Production was primarily due to the fewer working days in April, as most factories were temporarily closed for the Sinhala and Tamil New Year holidays.

Moreover, Employment and Stock of Purchases decreased during the month, in line with the decline in New Orders and Production.

Meanwhile, Suppliers’ Delivery Time further lengthened in April, owing to the extended holidays in the month.

Sri Lanka Purchasing Managers’ Index for Services (PMI – Services) indicated a slower expansion in services activities in April 2024 as reflected by the Business Activity Index, which recorded an index value of 56.7.

The expansion in Business Activities was driven by the improvements observed across several sub-sectors.

Accordingly, business activities in the financial services sub-sector continued to grow following the reduction in policy rates in March 2024.

Further, business activities in the wholesale and retail trade sub-sector experienced a considerable growth amid the seasonal demand.

Meanwhile, programming and broadcasting, telecommunication and real estate sub-sectors also recorded positive developments during the month.

Nevertheless, the accommodation, food and beverage sub-sector declined slightly during the month in line with the decline in tourist arrivals on a month-on-month basis.

New Businesses increased in April, particularly with the increases observed in wholesale and retail trade, financial services and real estate sub-sectors.

Employment declined in April despite some new recruitments made by several companies. Meanwhile, Backlogs of Work continued to decline during April.

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