PMI shows economic uptick Outlook remains cautiously positive

Bangladesh’s economic activity accelerated in February, with the Purchasing Managers’ Index (PMI) rising 1.8 points from the previous month to 55.7.

The latest data shows stronger growth in the agriculture, manufacturing and services sectors, while the construction sector slipped back into contraction during the month, according to a report released on 8 March.

The index is jointly published by the Metropolitan Chamber of Commerce and Industry, Dhaka and Policy Exchange Bangladesh.

The report noted that the agriculture sector recorded its sixth consecutive month of expansion, with growth accelerating during February.

Indicators for new business and business activity expanded at a faster pace. The indexes measuring input costs and order backlogs also returned to expansion.

However, the employment index continued to contract and did so at a quicker rate.
The manufacturing sector remained in expansion for the 18th consecutive month, with growth gathering momentum.

Key indicators such as new orders, factory output, imports, input prices and supplier delivery times all continued to expand.

In contrast, the indexes for new exports, finished goods and employment remained in contraction. Input purchases returned to expansion, while the order backlogs index moved back into contraction during the month.

The construction sector fell back into contraction after recording expansion in the previous month.

The sector saw declines in new business, employment and order backlogs. However, construction activity and input cost indexes continued to expand.

The services sector posted its 17th consecutive month of expansion, with the pace of growth accelerating.

The sector registered growth in new business, business activity, employment, input costs and order backlogs.

Looking ahead, the future business index pointed to continued expansion across all major sectors — agriculture, manufacturing, construction and services — indicating sustained optimism among businesses.

Survey respondents reported modest seasonal optimism ahead of Ramadan and Eid-ul-Fitr, alongside ongoing challenges from elevated input costs and uneven performance across sectors.

While stronger festive demand is expected to support sales — particularly in the services and retail sectors — many businesses expressed concerns about narrowing profit margins due to rising costs of raw materials, labour and utilities.

Although business expectations remain cautiously positive, the construction sector and some labour market indicators continue to show signs of weakness.

Overall, the near-term outlook appears seasonally favourable. However, broader growth prospects remain constrained by persistent inflationary pressures, sector-specific bottlenecks and external economic risks, the report said.

Commenting on the findings, M Masrur Reaz said the February PMI reflects a modest, seasonally driven improvement in economic activity.

He noted that the increase suggests stronger demand in agriculture and services, partly linked to consumption ahead of Ramadan.

“The continued expansion of the future business index across major sectors indicates sustained business optimism,” he said. “However, escalating military tensions in the Middle East could pose significant downside risks to growth expectations.”