Bangladesh PMI falls to 49.9 in August as manufacturing, services contract
The overall PMI stood at 49.9 in August, marking a significant 7.9-point drop from July's reading of 57.8.
Bangladesh's overall Purchasing Managers' Index (PMI) fell 7.9 points to 49.9 in August, signalling a slight contraction in economic activity as manufacturing and services weakened, according to a report released today (8 August).
The August PMI was released jointly by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh (PEB). A reading above 50 indicates expansion, while one below 50 indicates contraction.
The decline was driven mainly by manufacturing and services, both of which moved into contraction. Agriculture continued to expand for the 12th consecutive month, while construction returned to growth.
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Manufacturing sees sharp contraction
The manufacturing PMI recorded the sharpest decline, falling 18 points to 47.4 in August.
New orders, new export orders, output, stocks of input purchases, imports and employment all reverted to contraction. Meanwhile, input prices continued to rise at a faster pace.
Order backlogs remained in contraction, although the rate of decline slowed, while supplier delivery times remained unchanged.
Manufacturing-sector respondents reported difficulties accessing funds through banking channels, shortages of electricity and gas, and weaker business activity due to reduced orders in the ready-made garment sector. They also called for lower fuel prices and reduced production costs.
Services contracts after 22 months
The services PMI fell 6.8 points to 49.2 in August, entering contraction for the first time in 22 months.
New business and business activity continued to expand, but at slower rates, while employment contracted sharply.
Input costs continued to rise, although at a slower pace, and order backlogs remained in contraction.
Services-sector respondents called for greater financial support, lower electricity bills and operating costs, as well as reductions in income tax and other taxes.
Agriculture, construction remain positive
Agriculture recorded a PMI of 56.5 in August, up 1.3 points from the previous month, marking its 12th consecutive month of expansion.
New business and business activity remained in expansion and employment increased. Input costs continued to rise strongly, though at a slightly slower rate, while order backlogs remained in contraction.
Agricultural respondents called for lower prices of farm inputs, particularly pesticides.
Construction, meanwhile, returned to expansion with a PMI of 52.4. Construction activity and employment moved into expansion, while new business contracted at a slower pace.
Input costs expanded faster, while order backlogs moved into contraction.
Business optimism moderates
The report said businesses remained cautiously optimistic about future conditions, with many respondents describing their current situation as satisfactory and expecting improvement in the coming months.
However, respondents stressed the need to reduce business costs, increase access to finance and ensure a more supportive policy environment.
The Future Business Index showed a slight decline in optimism across all sectors.
Dr M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said the August PMI indicated that economic activity remained broadly near the neutral threshold despite temporary pressures on manufacturing and services.
"Agriculture continued expanding, while construction returned to growth, highlighting underlying economic resilience," he said.
Reaz said the moderation in manufacturing partly reflected weaker monthly exports and temporary energy disruptions linked to LNG infrastructure maintenance.
