Manufacturing, services sectors expand at slower pace in Jan.

Manufacturing and services sectors grew at a slower pace in January judging by the Purchasing Managers’ Index (PMI) released by the Central Bank.

It said manufacturing sector PMI expanded at a slower pace in January, recording an index value of 54 mainly due to the slower expansion in New Orders and Stock of Purchases.

New Orders, Production and Stock of Purchases sub-indices expanded at a slower pace, particularly in the manufacturing of food and beverages sector with the decreasing demand after the festival season. Further, a slowdown in Stock of Purchases in textile and wearing apparel sector could be observed due to Chinese New Year holidays. 

Employment contracted during the month due to the leaving of employees from their jobs for better-paid employments.

Meanwhile, a significant lengthening of Suppliers’ Delivery Time was experienced, especially in manufacturing of textile and wearing apparel sector. Although, lengthening of Suppliers’ Delivery Time usually indicates higher demand for materials with the expanding manufacturing activities, the new coronavirus (COVID-19) outbreak in China since early January has mainly caused this delay. Further, many respondents in this sector highlighted that their import orders for materials from China have been delayed indefinitely due to the same reason. 

All sub-indices of PMI Manufacturing, except Employment, exceeded the threshold of 50 (neutral) signalling an overall expansion in manufacturing activities during the month of January.

Although the manufacturers, especially those related to the apparel sector, cautioned that the new coronavirus outbreak would disrupt the global supply chain, overall expectations for manufacturing activities for the next three months remain slightly improved compared to last month. 

The services sector continued to grow, yet at a slower pace, in January, supported by the expansion in New Businesses, Business Activity, Employment and Expectations for Activity.

Business Activities in accommodation, food and beverage, and telecommunication sub-sectors expanded due to peak season of tourism and tax reductions introduced by the Government, respectively. Further, Business Activities in financial services, transportation, and wholesale and retail trade sub-sectors also recorded growth in January, compared to the previous month.

However, overall Business Activity expanded at a slower pace since the activity level in January was lower than the seasonally high activity level prevailed in December 2019.

Meanwhile, Employment increased in January after the continuous decline for nine consecutive months due to new recruitments at the beginning of the year. This increase in Employment also contributed towards the decline in Backlogs of Work in January.

Moreover, increase in Expectations for Activity in accommodation, food and beverage, and transportation sub-sectors eased in January due to the impact of the new coronavirus outbreak as there would be a decline in arrival of tourists and shipments from China.