Economic expansion might have slowed in June: PMI

Bangladesh’s economic activities grew at a slower pace in June than a month ago, as reflected in the fall in the Purchasing Managers’ Index (PMI) score, an indicator that helps assess the economic health of a country.

A PMI reading above 50 indicates expansion, while a reading below 50 signals contraction.

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The June PMI fell by 9.9 points to 52.9 from its May level, amid a contraction in the manufacturing and construction sectors.

The agriculture and services sectors continued to expand, albeit at a slower pace, according to the PMI report published yesterday by the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), and Policy Exchange Bangladesh (PEB).

“The June PMI shows Bangladesh’s economy remained in expansion, but growth varied across sectors,” said Masrur Reaz, chairman and CEO of PEB.

The agriculture sector recorded its 10th consecutive month of expansion, although growth slowed. New business, business activity, employment and input costs increased, while order backlogs remained in contraction for the second straight month.

The services sector expanded for the 21st consecutive month, but growth slowed. New business, business activity, employment and input costs all increased at a slower pace, while order backlogs contracted at a faster pace.

The manufacturing sector returned to contraction after expanding for two months. Weaker new orders, exports, employment, supplier deliveries and order backlogs dragged down performance.

Factory output, input purchases and imports continued to increase, although at a slower pace. At the same time, input prices rose faster, while the finished goods index returned to expansion.

The construction sector also returned to contraction after expanding in the previous month. New business, construction activity and employment declined, while input costs and order backlogs grew at a faster pace.

“Agriculture and services continued to expand, though more slowly, while manufacturing and construction contracted due to weaker orders, exports, employment, supplier deliveries and business activity,” Masrur said.

“The long Eid holidays, the onset of the monsoon and fading pre-Eid demand weighed on business conditions in June,” he added.

Despite the slowdown in June, the Future Business Index suggests agriculture, construction and services are expected to continue expanding in the coming months.

The manufacturing sector is also expected to return to expansion, reflecting cautious optimism about business conditions.

The MCCI and PEB have been publishing the PMI since January last year. Initiated by the UK government, the index is based on a survey of more than 500 private sector firms.