PMI hits 65.7 in Jan, signalling economic expansion

Staff Reporter :

Bangladesh’s Purchasing Managers’ Index (PMI) increased by 4.0 points in January, reaching 65.7, signalling growth across key economic sectors, except for construction.

Despite the positive outlook, the economy continues to face challenges due to political uncertainties and disruptions caused by protests.

The PMI provides a snapshot of economic activity, with a reading above 50 indicating expansion, below 50 signalling contraction, and 50 representing stagnation.

The recent rise in PMI was driven by stronger growth in agriculture, construction, and services, although the manufacturing sector saw slower expansion.

However, the report suggests that future economic momentum will depend on political stability, particularly with regards to the timeline and roadmap for transitioning to an elected government.

In agriculture, January marked the fourth consecutive month of expansion, with business activity accelerating.

Both new business and order backlogs returned to expansion, although the employment index fell into contraction, and input costs increased at a slower pace.

The manufacturing sector recorded its fifth consecutive month of expansion, albeit at a slower pace. Key indicators, including new orders, new exports, factory output, input purchases, imports, input prices, and supplier deliveries, all showed slower growth.

However, the finished goods index accelerated, while the employment index returned to expansion and order backlogs contracted at a slower rate.

The construction sector recorded its second consecutive month of expansion at a faster pace, driven by stronger growth in new business, construction activity, and input costs. However, the employment index declined into contraction, and the order backlog index showed faster contraction.

The services sector also expanded for the fourth consecutive month, with new business, business activity, employment, and order backlogs growing at a faster pace. The input costs index also returned to expansion.

The Bangladesh PMI, launched in 2024 by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh, in collaboration with the Singapore Institute of Purchasing & Materials Management (SIPMM), with support from UK International Development, covers key economic sectors.

Based on monthly surveys of over 500 private-sector enterprises, the PMI measures changes in business activity compared to the previous month using the diffusion index methodology.

Developed by SIPMM with technical support from Policy Exchange, the methodology aggregates responses across various economic indicators.

A press release from PMI stated: “The latest PMI readings indicate that the economy remains on an expansion track for the fourth consecutive month, likely driven by growing exports, seasonal consumption trends, and improvements in the agro supply chain.”