Photo: Collected
The country’s overall economic activity weakened further in September compared to August. The pace of business activity in the industrial sector slowed that month as new orders, production, stocks of raw materials and finished goods, and imports declined; contraction was also seen in the services and construction sectors. Although the agriculture sector remained on an expansionary trend, its positive impact on the overall economy was not sufficient.
This picture has emerged from the Purchasing Managers’ Index (PMI) report published yesterday.
The course of the economy is presented every month through the Purchasing Managers’ Index or PMI. Last month’s PMI was released on Thursday; information on the index’s position was given in a press release. The PMI’s assessment says the economy has been going through ups and downs for two years.
Most recently, in September, the PMI value came down to 48.6 points, from 49.9 points in August. The index is being jointly prepared by the Metropolitan Chamber of Commerce and Industry (MCCI), an organisation of businesspeople and entrepreneurs, and research organisation Policy Exchange.
The value of the index is determined on the basis of the opinions of top executives of 400 private firms in the main sectors of the economy: agriculture, business, construction, manufacturing and services. In preparing the index, information is collected from various firms on different matters including raw material purchases, product orders and employment.
The PMI value is basically measured on a scale from zero to 100. A value above 50 indicates expansion of the economy, while one below 50 indicates contraction.
The release said a picture of caution is being seen in the business confidence of the businesspeople who took part in the survey. Businesspeople say future prospects will mainly depend on growth in domestic demand, reliable energy supply, easy access to finance and a reduction in cost pressures. However, some firms have expressed hope of improvement in business activity in the coming months, given confirmed orders, reliable buyers and the possibility of demand rising in the upcoming winter and business season.
The manufacturing sector played a major role in the fall of the PMI. Last month the sector’s PMI fell by 2.6 points to stand at 44.8 points; in August the value was 47.4 points. Similarly, the construction sector’s PMI value fell by 3.8 points last month to 48.5 points.
The services sector has been in the contraction phase for two straight months; last month the sector’s PMI value came down to 49 points. In this sector, new business and business activity have returned to contraction, and the pace of contraction in employment has slowed somewhat. On the other hand, the trend of expansion in the agriculture sector has continued for 13 straight months. However, the sector’s PMI value has fallen by 1.3 points from the previous month to 55.2. In agriculture, the pace of expansion in new business, business activity and employment has slowed.
On the PMI value, Policy Exchange Bangladesh Chairman M Masrur Reaz said in a statement, ‘The September PMI shows that Bangladesh’s economy is still under pressure because of weakness in the manufacturing, construction and services sectors. The continued expansion of the agriculture sector has maintained some stability in the economy.’
He further said, ‘Slightly positive expectations in all sectors are creating a promising foundation for economic recovery. To restore the pace of economic activity, it is important to strengthen domestic and export demand, ensure reliable energy supply, reduce financing constraints and control the pressure of rising costs.’
