Bangladesh PMI rises to 65.7 driven by faster expansion in agri, construction, services sectors

Infographic: TBS

The latest Purchasing Manager Index (PMI) readings for Bangladesh indicate that the country's economy remains on an expansion trajectory for the fourth month, driven by growing exports, seasonal consumption trends, and an improved agro supply chain.

The PMI for January has increased by four points from the previous month to 65.7, according to a press release issued today by the Metropolitan Chamber of Commerce and Industry (MCCI) and the Policy Exchange Bangladesh (PEB).

The release attributed January's readings to a faster rate of expansion in the agriculture, construction, and services sectors. However, the manufacturing sector experienced a slower growth rate.

However, the confidence for new business investments and expansion, as recorded in the future business index, remains sluggish – particularly among the firms catering to the domestic market due to sluggish demand, growing cost of business and energy supply disruptions, the release said.

"The dynamism in the economy going forward will also be contingent on clarity on the timeline and roadmap for transitioning to an elected political government," the release reads.

MCCI and PEB introduced the PMI 14 months ago, and it has since been published monthly as a forward-looking economic indicator, helping to understand the direction the economy is headed. It is widely used by investors, businesses and policymakers for making key decisions.

A PMI reading above 50 signals economic expansion, while a reading of 50 indicates no change compared to the last month. A reading below 50 suggests a contraction in economic activity.

During the July uprising, the PMI plummeted to just over 35 points. However, from September onwards, it crossed the 50-point mark and continued to rise, eventually reaching approximately 66 points.

According to the release, the agriculture sector expanded for the fourth consecutive month at a faster rate. Both the indexes of new business and order backlogs reverted to expansion readings. However, the employment index reverted to a contraction, while the input costs index saw a slower expansion.

The manufacturing sector posted a 5th month of expansion but at a slower rate. The sector posted slower expansion readings for the indexes of new orders, new exports, factory output, input purchases, imports, input prices, and supplier deliveries. 

The finished goods index posted a faster expansion, whereas the employment index reverted to an expansion. The order backlogs index posted a slower contraction rate.

The construction sector recorded a second month of expansion at a faster pace for the indexes of new business, construction activity, and input costs. The employment index reverted to a contraction, and the order backlogs index posted a faster contraction rate.

The services sector also posted a 4th month of expansion at a faster rate for the indexes of new business, business activity, employment, and order backlogs. The input costs index reverted to an expansion.