Manufacturing, services sectors expand in March

The country’s manufacturing and services sectors have expanded considerably in March in comparison to the previous month, as per the Purchasing Managers Index (PMI).

The Central Bank said yesterday that the manufacturing activities accelerated in March compared to February this year. Manufacturing PMI reached a 46-month high and signalled a surge in manufacturing activities. The increase of PMI in March was largely attributable to increase in New Orders in line with the seasonal demand, especially in manufacturing of food and beverages.

Production also increased significantly with the intention of achieving expected production levels ahead of the New Year holidays in April. The Stock of Purchases and Employment also increased during the month in line with tight production schedules. Most respondents, especially in textile and apparel sector, highlighted that they had to work overtime in order to fulfil the orders ahead of the festival holidays. The lengthening of Suppliers’ Delivery Time also contributed positively to the overall increase. All sub-indices of PMI Manufacturing recorded values above the neutral 50.0 threshold, signalling an overall expansion in manufacturing activities in March compared to February.

The services sector expanded at a higher rate in March, underpinned by accelerated expansion in New Businesses, Business Activity and Employment compared to February. The Business Activity sub index followed the usual seasonal upturn and reached a three month high in March, contributing significantly to the expansion in the services sector during this period. The expansion in Business Activities was mainly seen across wholesale and retail trade, and transportation sub-sectors due to New Year festive season. 

Service providers’ outlook on the three months’ business activities slowed down further in March, as many respondents are taking a wait and see approach. Moreover, the business activities of accommodation, food and beverage and other personal services sub-sectors are expected to deteriorate since the upcoming period is the off-peak season for tourism.

Prices Charged in the services sector increased at a slower rate in March due to the marginal increase in fuel prices, while the expected Labour Cost in the services sector increased at a higher rate due to expected salary increments and incentives to be granted during the festive season.