Manufacturing expands in January 2021 - CBSL PMI report

Manufacturing expands in January 2021 - CBSL PMI report

Manufacturing PMI remained expanded in January 2021 recording an index value of 60.2 owing to the expansion in New Orders and Production.

The increase of Stock of Purchases sub-index also contributed to the overall expansion of the PMI.

New Orders and Production sub-indices remained at healthy levels  especially in manufacture of food & beverages sector following the
festival season. However, some respondents in this sector highlighted that lower than expected demand due to the COVID-19 situation affected the business activities.

The Employment expanded at a higher rate during this period with new recruitments. However, some manufacturers highlighted that
they had to struggle to complete their production on time due to the lack of employee availability mainly with the pandemic related
health concerns.

Although the New Orders and Production expanded at a slower pace, the Stock of purchases expanded at a higher rate due to depleting of stocks previously held and intended accumulation of stocks for future requirements, anticipating supply disruptions, due to upcoming Chinese New Year holidays. Further, the Suppliers’ 

Delivery Time sub-index lengthened at a higher pace during the month.

Many respondents mentioned that their shipments were delayed due to issues related to port /shipping.

Expectations for manufacturing activities in the next three months improved further with the expectation for the normalisation of
economic activities within the country as well as in major export markets.


Starting the year with a positive note, services sector PMI recorded a value of 56.2 in January 2021.

This indicates a further recovery in the services sector, which was affected by the second wave of COVID-19 pandemic. This increase was underpinned by the expansions observed in new businesses, business activities and expectations for activity.

New businesses increased in January 2021, particularly with the improvements observed in financial services, transportation, and
wholesale and retail trade sub-sectors.

Business activities in the services sector increased in January 2021 for the second consecutive month. Goods and passenger transportation sub-sector recorded an improvement during the month with people adopting to the new normal environment.

Business activities in accommodation, food and beverage sub-sector improved further with the gradual recovery in domestic tourism owing to the promotional discounts offered during the period.

Moreover, financial
services, education and other personal services sub-sectors also experienced an increase in business activities in January 2021.

However, respondents in import trade continuously cited their concerns over restrictions on non-essential imports.

Employment declined in January 2021 due to non-extension of work agreements of the contract employees and retirements amidst delays in new recruitments.

Backlogs of work increased in January 2021 due to the disruptions to business activities caused by the COVID-19 pandemic related health
concerns.

Expectations on future business activities increased further in January 2021 due to the increased optimism on the recovery of economic
activities that were affected by the second wave of COVID-19 pandemic with people adopting to the new normal environment.