PMI jump signals economic upswing
Bangladesh’s private-sector economy gathered pace in July, with a sharp rebound in manufacturing and continued growth in agriculture and services pushing the country’s Purchasing Managers’ Index (PMI) to its highest level in recent months and signalling a broader strengthening of economic activity.
The PMI rose 4.9 points from June to 57.8 in July, indicating a stronger pace of expansion, according to the latest Bangladesh PMI report released on Sunday by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh (PEB).
The improvement was led overwhelmingly by manufacturing, while construction continued to contract marginally despite showing signs of recovery.
Three of the four sectors tracked by the index recorded expansion in July.
Manufacturing posted the strongest performance with a PMI reading
of 65.4, followed by services at 56.0 and agriculture at 55.2. Construction remained just below the 50-point threshold at 49.3.
A PMI reading above 50 indicates expansion, while a reading below 50 signals contraction.
Manufacturing drives recovery
Manufacturing recorded the most significant turnaround, with its PMI jumping 16.6 points from June to 65.4, making the sector the largest contributor to the overall improvement in the headline index.
The sector recorded expansion in new orders, new export orders, output, input purchases, imports, employment and supplier deliveries. Input prices also increased, pointing to continued cost pressures across manufacturing.
Despite the broad-based improvement, order backlogs remained in contraction, suggesting that manufacturers continued to work through accumulated orders even as new business and production strengthened.
The manufacturing recovery also coincided with the country’s highest monthly export earnings in 12 months, according to Dr M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.
“The July PMI signals broad-based strengthening of Bangladesh’s economy, led by a sharp manufacturing rebound and continued expansion in agriculture and services,” Reaz said.
He noted that construction remained marginally in contraction despite improving conditions.
Agriculture maintains expansion
Agriculture continued to expand for the 11th consecutive month, with its PMI standing at 55.2.
However, the sector’s growth moderated sharply, with the reading falling 9.6 points from the previous month.
New business and business activity remained in expansion, although employment moved into marginal contraction.
Input costs continued to rise strongly, while order backlogs remained in contraction, indicating that businesses were facing cost pressures even as overall agricultural activity remained positive.
Services extends 22-month growth streak
The services sector maintained its expansion for a 22nd consecutive month, with its PMI increasing 1.4 points to 56.0.
New business, employment and input costs recorded faster rates of expansion, while the contraction in order backlogs eased. Business activity itself remained firmly in expansion.
The continued performance of services, alongside the manufacturing rebound, suggests that the improvement in July was not confined to a single part of the economy.
Construction remains weak
Construction was the only major sector to remain in contraction, although conditions improved considerably from June.
Its PMI rose 9.1 points to 49.3, bringing the sector close to the expansion threshold. New business, construction activity and employment all recorded slower rates of contraction.
At the same time, input costs and order backlogs continued to expand, highlighting persistent cost and workload pressures within the sector.
Business confidence strengthens
The Future Business Index showed strong expansion across all four sectors, pointing to a high degree of optimism about business conditions in the months ahead.
Reaz said the broad-based optimism reflected improving business confidence, stronger prospects for the external sector, better foreign-exchange conditions and expectations of a more supportive business environment following the FY2026-27 Budget.
“The manufacturing recovery coincided with the highest monthly export earnings in 12 months while construction remained marginally in contraction despite improving conditions,” he said.
The stronger PMI reading provides a timely indication that economic activity may be gaining traction after a period of weaker growth and persistent macroeconomic pressures.
However, rising input costs and continued contractions in order backlogs in several sectors remain areas to watch.
The Bangladesh PMI is designed to provide timely insights into the country’s economic health and help businesses, investors and policymakers make informed decisions.
The index was developed by MCCI and Policy Exchange Bangladesh with support from the UK Government and technical assistance from the Singapore Institute of Purchasing and Materials Management (SIPMM).
