PMI returns to growth territory recording 53.5 index value in May
Services sector Purchasing Managers Indices (PMI) returned to growth territory recording an index value of 53.5 in May 2023 following the marginal drop observed in the previous month.
This was led by the increases observed in New Businesses, Business Activities and Expectations for Activity. New businesses increased in May 2023 compared to April 2023, particularly with the increases observed in insurance, professional services and transportation sub-sectors.
Business activities continued to grow for the third straight month in May 2023 driven by improvements observed in most of the subsectors. Accordingly, business activities in other personal activities, insurance, professional services and human health sub-sectors exhibited some improvements during the month.
Nevertheless, business activities related to the wholesale and retail trade sub-sector declined as the festive season ended, while the business activities related to the accommodation, food and beverage sub-sector declined amid the moderation of tourist arrivals.
Employment continued to decline in May at a higher pace due to resignations, migrations and retirements though few new recruitments took place during the month. Meanwhile, Backlogs of Work also decreased at a higher rate during the month.
Global services PMI rose to 55.5 in May 2023 from 55.4 in April 2023, signalling an expansion in global services activities. Meanwhile, Manufacturing PMI declined in May 2023, yet at a slower rate, indicating a month-on-month contraction in manufacturing activities.
Accordingly, Manufacturing PMI recorded an index value of 46.2 in May, driven by decreases recorded in all the sub-indices. The decline in Production and New Orders was mainly driven by the manufacture of the food & beverages sector. As per the respondents, this decline was due to the seasonal drop in demand after the festive season and the deterioration in purchasing power of the consumers.
Further, orders received for the manufacture of the textile and apparel sector remained at the same low level recorded in April, mainly due to subdued global demand and losing market share to more competitive countries. Moreover, Employment and Stock of Purchases also decreased in line with the decline in New Orders and Production.
Many respondents mentioned that they maintain a minimum raw material stock, anticipating a continuous decline in raw material prices with the appreciation of the Sri Lanka rupee.
The global manufacturing PMI remained unchanged at 49.6 in May compared to April 2023.