Central Bank expects manufacturing to pick up in 1Q

Wednesday, 17 January 2018 00:00 -     - {{hitsCtrl.values.hits}}


  • CB says increase in Stock of Purchases and Employment 
  • Manufacturing expands at higher pace in December 
  • New businesses hit six-month high, Services sector growth anticipated

 The Manufacturing Sector PMI recorded 59.1 in December, which is a marginal increase of 0.3 index points compared to November 2017, the Central Bank said yesterday, indicating the economy would pick up in the first quarter of 2018.  

This indicates that manufacturing activities expanded at a higher pace in December compared to November 2017. This was mainly driven by an increase in the Production sub-index. 

Further, the Stock of Purchases and Employment sub-indices also expanded at a higher pace while the New Orders sub-index expanded, albeit at a slower rate, during the month as compared to November 2017. Meanwhile, the Suppliers’ Delivery Time sub-index lengthened at a higher rate compared to the previous month. Overall, all the sub-indices of PMI recorded values above the neutral 50.0 threshold, signalling an overall expansion in December 2017. Moreover, the expectation for activities indicates an improvement for the next three months. Services sector PMI recorded 61.2 index points in December from 57.4 index points in November 2017. This indicates that Services sector activities expanded at a higher rate in December 2017. This was supported by all sub-indices namely New Businesses, Business Activity, Employment, Backlogs of Work and Expectations for Activity. 

This is the first time that the Backlogs of Work sub-index increased beyond the 50.0 threshold since the survey began in May 2015. New Businesses reached a six-month high, indicating further growth momentum in the Services sector.  The expansion in Business Activity was mainly observed in wholesale and retail trade; and the Accommodation, Food and Beverage Service subsectors, the reasons being increased demand during the festival season and an increase in both local and foreign tourism.  Prices Charged increased at a higher rate in December compared to November 2017 due to increased demand during the festival season. Expected Labour Cost increased in December 2017 due to the encashment of unutilised leave for 2017 and expected salary increments in 2018 under collective agreements.