Bangladesh’s Purchasing Managers’ Index (PMI) declined by 7.8 points to 54 in November last over the previous month, reflecting a slower expansion in key economic sectors.
A PMI reading above 50 indicates that the sector/economy is generally ‘expanding’ while a reading of 50 indicates ‘no change’ compared to last month and a reading below 50 indicates a ‘contraction’.
“November PMI indicates economic expansion losing steam, driven by weak global demand and low export competitiveness hurting exports, waning domestic demand and businesses withholding investments ahead of the national elections”, Dr. M Masrur Reaz, Chairman and CEO, Policy Exchange Bangladesh.
Despite yearly decline in exports, month-to-month increase and continued agricultural harvests helped secure overall expansion track, he noted.
“Interestingly, faster expansion for future business index was noted for all sectors, except manufacturing,” Mr. Masrur commented.
The agriculture sector posted its 3rd month of expansion, but at a slower rate, according to the latest report released by the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), and the Policy Exchange Bangladesh (PEB).
The sector posted slower expansion readings for the indexes of new business, employment, and input costs, whereas the business activity index posted a faster rate of expansion.
The sector’s order backlogs index posted a slower contraction rate.
On the other hand, the manufacturing sector posted its 15th month of expansion, but at a slower rate.
The sector posted expansion readings for the indexes of new orders, new exports, factory output, input purchases, finished goods, imports, input prices, employment, and supplier deliveries.
However, the order backlogs index posted a faster contraction rate.
The construction sector posted its 3rd month of expansion, though at a slower rate.
The sector posted expansion readings for the indexes of construction activity, employment, and input costs.
The order backlogs index posted a faster contraction rate, and the new business index reverted to a contraction reading.
The services sector posted its 14th month of expansion, but at a slower rate. The sector posted expansion readings for the indexes of employment and input costs.
The PMI is a forward looking economic indicator which helps understand the direction in which the economy is headed.
First developed in the United States in 1948, since then it has been used in over 50 countries for its accuracy and reliability in capturing the pulse of key sectors and the economy.
It is widely used by investors, businesses and policymakers for making key decisions. The Bangladesh PMI was initiated by the UK Government.
Covering the key economic sectors, the Bangladesh PMI is based on data compiled from monthly surveys of over 500 private sector enterprises.
The methodology was developed by Singapore Institute of Purchasing & Materials Management (SIPMM), with technical inputs from Policy Exchange.
jasimharoon@yaghoo.com