- Services hit lowest point since May 2015 on lack of new businesses and employment
The latest Purchasing Managers Index (PMI) released by the Central Bank on Friday showed a slowdown in manufacturing activities in November when compared with the previous month while the services sector also reduced to the lowest point since May 2015.
The slowdown observed in manufacturing activities in November was mainly driven by the slowdown in new orders and production, especially in manufacturing of textiles, wearing apparels, leather and related activities. However, new orders and production in the manufacturing of food and beverages activities have improved with the Christmas season demand. Employment remains unchanged during the period due to the difficulties in recruiting additional employees, especially in manufacturing of furniture activities.
Meanwhile, overall stock of purchases indicated a slowdown, mainly due to the subdued production of manufacturing of textiles, wearing apparels, leather and related products. Suppliers’ delivery time lengthened at a slower rate, which is mainly driven by the reduction of lead time on demand for supplies related to manufacturing of food and beverages activities to speed up their production.
All the sub-indices of PMI manufacturing recorded values above the neutral 50 threshold, signalling an overall expansion in November yet at a slower pace compared to October.
The Services sector expanded at a slower pace in November, recording the lowest index value since survey began in May 2015.
The slowdown in the services sector was mainly due to the record low index value reported for expectations for activity. Further, a notable slowdown was also observed in new businesses and employment. The current political situation in the country and uncertainty on future policies weighed on respondents’ expectations for activity and the growth in new businesses.
However, on a positive note, business activities of wholesale and retail trade, and accommodation, food and beverage sub sectors reported a growth due to upcoming festive season and the peak season for tourism.
Prices charged of the services sector increased due to depreciation of the local currency. However, some respondents cited that the recent reduction in fuel prices would cause a less-than-expected increase in their output prices. The expected labour cost in the services sector also increased during November due to bonus payments and increments.