Sri Lanka’s manufacturing recovers amidst decline in services

Sri Lanka’s manufacturing recovers amidst decline in services

17 June 2019 09:07 am

Sri Lanka’s manufacturing activities recovered considerably in May 2019 which is an increase compared to April.

The recovery of manufacturing sector is mainly attributable to the significant increase in Production and New Orders, especially, in manufacturing of textiles, wearing apparels, leather and related products, Central Bank revealed in a sectorial progress report.

Increase in production was mainly attributable to the fulfillment of accumulated orders using extra hours of factory operations.

Many respondents, especially in textile and apparel sector, highlighted that they had to work extra hours on week days as well as in weekends during the month to clear the backlog of orders.

Employment contracted as a slight decline in new recruitment was observed, particularly, in manufacturing of food and beverages sector.

Although, the New Orders expanded, the Stocks of Purchases continued to contract yet at a slower rate, due to the stocks of raw materials brought forward from the previous month.

Suppliers' Delivery Time lengthened at a slower rate due to security measures deployed after the Easter Sunday attack.

Services sector continued to deteriorate in May 2019 compared to previous month due to decline in Employment and Business Activity sub-indices, which was mainly caused by Easter Sunday attack.

Employment sub index recorded the lowest level since the commencement of the survey in May 2015 and it was mainly due to discontinuation of the service of contract employees with the deterioration in Business Activity, particularly in accommodation, food & beverage, and other personal services sub sectors.

Further, deterioration of Business Activity was also observed in the wholesale and retail trade, and transportation sub sectors.

Many respondents highlighted that uncertainty arose from Easter Sunday attack still prevails in the country. Thus, New Businesses and Expectations for Activity continued to decline compared to previous month, yet at a slower pace.

Prices Charged in the Services sector increased at a slower rate in May 2019 due to price discounts offered by hotels and other firms in accommodation, food & beverage, and other personal services sub sectors.

Moreover, Expected Labour Cost for next three months increased at a higher rate in May 2019.