Economy shows contraction as PMI fell by 7.9 points in August
The August reading of the Bangladesh Purchasing Managers’ Index (PMI) fell by 7.9 points from the previous month to 49.9, reflecting a moderation in economic activity amid temporary pressures on manufacturing and services.
The decline was driven mainly by a slowdown in manufacturing and services, both posting marginal contraction readings. Agriculture continued to expand while construction sector reverted to expansion.
However, the agriculture sector remained a key source of strength, with its PMI rising 1.3 points to 56.5 in August. The sector recorded its 12th consecutive month of expansion, supported by continued growth in new business and business activity, while employment also increased.
The construction sector also returned to expansion, reaching 52.4 in August. Construction activity and employment moved into expansion, indicating renewed momentum in the sector.
Although manufacturing moderated during the month, the sector’s performance reflected temporary challenges. Its PMI fell 18 points to 47.4, while input prices continued to increase.
Order backlogs remained in contraction, although the pace of contraction slowed, and supplier delivery times remained unchanged.
The services sector recorded a PMI of 49.2 in August. Despite entering contraction for the first time in 22 months, new business and business activity continued to expand, albeit at slower rates. Input costs and order-backlog contraction also moderated.
Business respondents maintained cautious but positive expectations about the coming months. Many described their current business situation as satisfactory and expressed hope for further improvement.
They also identified lower business costs, stronger financial support and a more supportive policy environment as important factors for strengthening activity.
The report said improvements in energy supply, easier access to finance, better control of operating costs and business-friendly tax and policy support could further strengthen business confidence and accelerate the recovery of economic activity.
The Future Business Index showed a slight moderation in optimism across all sectors, although overall expectations for future business conditions remained cautious but positive.
The Bangladesh PMI is an initiative of the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh (PEB), developed with support from the UK Government and technical assistance from the Singapore Institute of Purchasing & Materials Management (SIPMM).
