CB reports slowing of growth in manufacturing and services due to dollar shortage, fuel scarcity and power cuts

A report released by the Central Bank, on Wednesday (16) shows that shortage of dollars, fuel scarcity and power cuts have slowed the growth of the manufacturing and service sectors in February.

The report, Purchasing Managers’ Index (MPI) shows that the Manufacturing PMI, 52.5 in February, reflected a decrease of 6.2 index points in that month compared to January.

The services sector PMI recorded an index value of 51.8 in February, a decrease of 5.7 index points compared to January. The PMIs for both manufacturing and services sectors grew at a slower pace in January as compared to December 2021.

The Central Bank has said production, stock of purchases and employment declined in February, while suppliers’ delivery time lengthened on a month-on-month basis. There was an expansion in new orders, especially in the manufacture of foods and beverages, in February, ahead of Sinhala and Hindu New Year season. However, the production declined on a month-on-month basis, due to fewer working days in February, and supply-side constraints.

The reports says many companies found it difficult to purchase imported raw and packaging materials due to delays in opening letters of credit by banks.

However, business activities continued to grow in February, even though at a slower pace, with the improvements observed in several sub-sectors. The report said, financial services, education, professional services, other personal activities, real estate and transportation sub-sectors reported improvements during the month. In addition, business activities in the accommodation, food and beverage sub-sector also recorded a marginal growth amid the steady increase in tourist arrivals despite the disturbances occurring from disruptions to fuel and electricity supplies during the latter part of the month.