PMI SL Purchasing Managers’ Index

July 2021

STATISTICS DEPARTMENT CENTRAL BANK OF S RI LANKA

RESULTS OF PMI MANUFACTURING AND PMI SERVICES INDICES

KEY POINTS:

Purchasing Managers' Indices for both Manufacturing and Services activities expanded in July 2021

Manufacturing PMI increased further in July 2021 recording

an index value of 57.8 with an increase of 7.4 index points Manufacturing
Increase of
compared to June 2021. This was mainly attributable to the PMI
increases observed in New Orders, Production, Employment, and Index Value 7.4 index points

57.8
Stock of Purchases sub-indices. compared to

The significant increases in New Orders, Production, Employment, June 2021

and Stock of Purchases sub-indices, particularly in the manufacture
of textile & wearing apparel and food & beverage sectors, have
mainly contributed to the considerable improvement in the PMI. PMI - Manufacturing
Some respondents in those sectors highlighted that they received
100
higher export orders, especially from the Europe, with the gradual Increasing rate of growth

normalization of economic activities, and they resumed new

67.3
64.6
recruitments with the expectation of future demand and following

57.8
50.4
the progress of the COVID-19 vaccination programme. 50

Variable Jun. Jul. +/- Summary

Increasing rate of contraction
0
PMI 50.4 57.8 + Rising, Higher Rate
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Sub-Indices of PMI 2019 2020 2021

New Orders 52.1 61.5 + Rising, Higher Rate Source: Central Bank of Sri Lanka

Production 43.2 54.0 + Increasing, from Decreasing

Employment 45.8 52.0 + Increasing, from Decreasing The World Outlook:
Stock of Purchases 45.3 51.0 + Increasing, from Decreasing
Manufacturing PMI
Suppliers' Delivery Time 68.9 69.0 + Lengthening, Higher Rate
Source: Central Bank of Sri Lanka
The global manufacturing PMI recorded a value
of 55.4 in July 2021 with a decrease of 0.1 index
Meanwhile, the Stock of Purchases sub-index increased in line with points from June 2021.
the expansion in New Orders and Production while the Suppliers' Manufacturing PMIs of USA and India
Delivery Time continued to lengthen in July 2021. Many increased at a higher rate, while those of Europe,
respondents stressed that delays in the opening of letters of credit UK and China increased at a slower rate.
and delays in settlement of foreign payments affect adversely the Meanwhile, Russia indicated a further
deterioration in manufacturing PMI in July 2021.
supply chain of importing raw materials. This has caused
disturbances for their production schedules. Source: Markit 1 as at 15th August 2021

The manufacturers cautioned that the uncertainty over the rapid

1 Markit is a leading global diversified provider of
spread of the COVID-19 virus would hamper the manufacturing financial information services. It is identified as the
activities in the country. Accordingly, overall expectations for global PMI compiler and compiles PMIs for over 30
countries and for key regions including the Eurozone.
manufacturing activities for the next three months deteriorated
significantly compared to the previous month, yet remained above
the neutral threshold.

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Signaling a further expansion of Services activity, Services
PMI increased further to an index value of 55.7 in July 2021. Services
Increase of
This increase was driven by the increases in new businesses, PMI
business activity, backlogs of work and expectations for activity. Index Value 4.4 index points

55.7
New businesses increased in July 2021 compared to June 2021 with compared to
the improvements observed in financial services, insurance, June 2021
transportation, telecommunication and real estate sub-sectors.
Business activities across most of the sub-sectors increased in July
in line with the relaxation of the travel restrictions. Accordingly, PMI - Services
financial services sub-sector reported a huge improvement during 100
Increasing rate of growth
the month. Transportation sub-sector also saw a considerable
progress with growths observed in passenger transportation and

55.7
51.4
50.4

51.3
freight volumes. Further, human health, insurance and 50
telecommunication sub-sectors also improved during the month.
Meanwhile, wholesale and retail trade, and other personal activities
sub-sectors also reported positive developments owing to Increasing rate of contraction
0
recommencement of business operations and recovery in demand

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following the gradual normalization of economic activities. 2019 2020 2021
Source: Central Bank of Sri Lanka
Employment continued to fall at a slower pace as retirements and
resignations exceeded the number of recruitments carried out
during the month.
Backlogs of work increased, yet at a slower pace, in July.
The World Outlook:
Services PMI
Variable Jun. Jul. +/- Summary
Global services PMI posted 56.3 in July 2021
PMI 51.3 55.7 + Rising, Higher Rate
down from 57.5 in June 2021, though signalling
Sub-Indices of PMI a further expansion of global service activities.
New Businesses 49.0 58.6 + Rising from Falling Services PMIs of USA, China and UK indicated
Business Activity 49.0 63.5 + Rising from Falling that their services sectors expanded in July 2021
Employment 46.1 49.0 - Falling, Slower Rate compared to the previous month, while that of
India and Japan indicated a deterioration.
Backlogs of Work 54.2 53.2 + Rising, Slower Rate
Source: Markit1 as at 13th August 2021
Expectations for Activity 58.3 54.5 + Rising, Slower Rate
Source: Central Bank of Sri Lanka

Expectations for business activities for the next three months

continued to increase in July with the gradual normalization of
economic activities. However, expectations of some respondents
were rather pessimistic as per the fast spread of the third wave of
COVID-19, import restrictions, delays in opening of letters of
credit and increase of input costs.

Technical Note
The Index
PMI is calculated as a ‘Diffusion Index’, where it takes values between 0 and 100.
PMI=50 - sector remained neutral on month-on-month basis; PMI>50 - sector is generally expanding on month-on-month basis
PMI<50 - sector is generally declining on month-on-month basis
Sample
The sampling frame was based on a list of large companies located in the Western province obtained from the EPF Department. Samples for
Manufacturing and Services activities were selected based on the GDP sectoral share, with a target of 100 responses for each.
Definitions of Variables
Employment : Number of staff working for the organization
Stock of purchases : Raw materials purchased and kept in a warehouse to be used for production
Supplier Delivery Time : Time lag between order placement and delivery by the supplier
Backlogs of Work : Uncompleted orders due to increased flow of business activity
Other variables are self-explanatory.

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