PMI expands in Feb. on higher production and new orders

• Latest index indicates economy returning to normalcy, employment growing  
• Services grow for 3rd consecutive month on financial services, transport and real estate 

The Purchasing Managers’ Indices (PMI) for both Manufacturing and Services activities expanded in February, propelled by an expansion of new orders and higher levels of production, the Central Bank said yesterday.  

Manufacturing PMI sustained its expansion in February 2021 recording an index value of 59.4, owing to the expansion in Production and New Orders. Further, Stock of Purchases and Employment, as well as Suppliers’ Delivery Time, remained expanded supporting to sustain the overall Manufacturing sector PMI at an elevated level.

The Production sub-index increased during the month, especially in the Manufacture of Food and Beverages sector, anticipating the upcoming festival demand, while New Orders recorded a high index value.

Further, the Manufacture of Textile and Wearing Apparel sector also recorded healthy index values with regard to New Orders and Production.

Employment expanded at a higher rate in February compared to January, particularly in the Manufacture of Food and Beverages sector, in-line with increase in Production. However, employment in the manufacture of textile and wearing apparel sector remained in the neutral threshold during the month.  

Although Production expanded at a higher pace, the Stock of Purchases expanded at a slower rate mainly due to the piled-up stocks during the previous month, owing to anticipated supply disruptions due to Chinese New Year holidays. Further, the Suppliers’ Delivery Time sub-index lengthened at a slower pace during the month.

Expectations for manufacturing activities in the next three months remained at improved levels as expectations grew for the normalisation of economic activities within the country as well as in major export markets.

Services PMI increased to 56.5 in February, indicating a further improvement in the services sector. This increase was underpinned by the expansions observed in new businesses, business activities and expectations for activity.

New businesses increased in February, particularly with the improvements observed in financial services, other personal services and real estate activities sub-sectors.

Business activities in the services sector increased in February for the third consecutive month. Transportation and financial services sub-sectors recorded an improvement during the month with the normalisation of economic activities. Further, the business activities in education sub-sector expanded in February due to new intakes of students to higher education institutes after the G.C.E.

Advanced Level examinations. Moreover, other personal services and real estate activities sub-sectors also experienced an increase in business activities in February.

Employment sub-index reached the neutral threshold level of 50 reflecting a moderation of decline in employment in February 2021, since some firms have started hiring new employees in line with the rise in their business activities.

Backlogs of work decreased in February with the normalisation of business processes, which were disrupted by the COVID-19 pandemic related health concerns.