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Sri Lanka’s manufacturing and services sectors record expansion in July

Sri Lanka’s manufacturing and services sectors record expansion in July

The Central Bank of Sri Lanka (CBSL) states that the gradual recovery since the Easter Sunday attacks in April has resulted in the expansion of the manufacturing and services sectors in July, with a significant increase in new orders and production.
The CBSL has made this observation in the newly released Purchasing Managers Index (PMI).
According to the Bank’s latest statistics, manufacturing activities have expanded further at a higher rate in July 2019, recording an index value of 55.7, which is an increase of 1.8 index points when compared to June 2019.
This expansion in manufacturing PMI has been mainly attributed to the significant increase in New Orders and subsequent increase in Production, especially in the manufacturing of food and beverages sector.
According to reports, the increase in New Orders was mainly due to the gradual recovery of the economy from disruptions related to the Easter Sunday attacks.
Meanwhile, employment has increased at a slower rate during the month of July, although many respondents in the textile and apparel industry highlighted that they had experienced a higher rate of labour turnover during the month, the local media reports quoting the PMI state.
The Stock of Purchases increased significantly with the expansion of New Orders and Production as well, as a precautionary measure to face possible disruptions during the upcoming election period, together with festive season demand, reports have further noted.
Also, the Suppliers’ Delivery Time has lengthened to the neutral level, indicating the same delivery time as the previous month, mainly due to the normalisation of tight security measures deployed after the Easter Sunday attacks, reports added.

OSL take:

The increase recorded in Sri Lanka’s manufacturing and services sectors in the month of July when compared to the previous month (June), is indicative that the country’s economy has made a very positive return to normalcy following the setback suffered in the aftermath of the Easter Sunday attacks in April. The country’s manufacturing sector has the potential for further development given Sri Lanka’s economic policies that are beneficial to industries and the many trade agreements as well as trade concessions enjoyed by the island. Therefore, foreign businesses/investors could explore business/investment opportunities in Sri Lanka’s manufacturing and exports sectors.

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Article Code : VBS/AT/20082019/Z_2

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