Bangladesh’s economic expansion slows in June as growth weakens in key sector: PMI

Bangladesh's economy expanded at a slower pace last month, as the June reading of the Bangladesh Purchasing Managers' Index (PMI) declined by 5.8 points from the previous month, recording a slower expansion rate of 53.1.

This latest PMI reading was attributed to a first-time contraction in the construction sector, while slower expansion rates were posted for the remaining key sectors of agriculture, manufacturing, and services, according to a press release.

The monthly PMI, jointly published by the Metropolitan Chamber of Commerce and Industry, Dhaka, and Policy Exchange Bangladesh, is based on sectoral indicators of business activity, new orders, employment, costs, and backlogs. A score above 50 indicates expansion, while a score below 50 signals contraction.

"The latest PMI readings indicate that the overall Bangladesh economy continued to expand for nine consecutive months. However, the pace of expansion slowed down in June, and the construction sector recorded its first contraction in the last eight months," said M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.

He added that extended Eid holidays, the onset of the monsoon, and uncertainty around actual or expected tax changes in the national budget all contributed to the slowdown in economic activity.

Key sectors weaken

In June, the agriculture sector posted its ninth month of expansion, but at a slower rate. The sector recorded its first contraction in the employment index, while faster expansion rates were noted for new business, business activity, input costs, and order backlogs, the press release said.

The manufacturing sector posted its tenth month of expansion, but also at a slower rate. The sector recorded contraction readings for input purchases, finished goods, imports, and employment. Slower expansion was recorded for new orders, new exports, factory output, input prices, and supplier deliveries. The order backlogs index reverted to expansion after recording contractions for ten consecutive months.

The construction sector returned to contraction after six months of expansion. It recorded contractions in new business, construction activity, employment, and order backlogs. The input costs index posted slower expansion.

The services sector posted its ninth month of expansion, but at a slower rate. It recorded contractions in new business, business activity, and order backlogs, while faster expansion was observed in employment and input costs.

Regarding the future business index, slower expansion rates were recorded in manufacturing and construction, while agriculture and services showed faster expansion rates.