Manufacturing activity reaches its lowest in April due to COVID-19

COLOMBO (News 1st): The COVID-19 induced downturn in the Sri Lankan manufacturing sector deepened during April as reflected by a further contraction in the manufacturing PMI, fell to the lowest level since the beginning of the survey recording the index value of 24.2 with a fall of 5.8 index points from the previous month, Central Bank data showed. Manufacturing establishments remaining closed or operating at a fraction of their usual capacity due to the lockdown and the decline in new orders, production, employment and inventory during the month, were the main contributors to the decline of the index, the bank said in a statement. The ongoing global health crisis, which has affected Sri Lanka’s leading export markets such as the USA and Europe have also led to the local textile and wearing apparel sector not receiving any orders for their regular products. However, the overall expectations for manufacturing activities for the next three months increased compared to the previous month, still remaining below the neutral threshold. New Business and Expectations for Activity declined in April 2020, yet at a slower pace. However, respondents in financial, health and professional services, wholesale and retail trade, and transportation sub-sectors are rather optimistic about future business activities with the steps taken towards the resumption of civilian life and institutions back to normalcy. Employment in both the manufacturing and services sector continued to decline due to the discontinuation of the service of contractual and casual employees amidst the freeze of new recruitment. The global manufacturing PMI recorded a value of 39.8 in April 2020 with a decrease of 7.5 index points from March 2020. Manufacturing PMI of India, UK, USA, Russia, Eurozone, and China contracted in April 2020 with the adverse impact of COVID 19.