Bangladesh’s economic activity slipped back into contraction in September, with manufacturing, construction and services all weakening, according to the latest Purchasing Managers’ Index (PMI).
The PMI fell 1.3 points to 48.6 in September from August. A reading below 50 indicates contraction in economic activity.
The index, released on Thursday by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh, showed weakness across three of the four sectors tracked.
Manufacturing recorded the sharpest deterioration, with its PMI falling 2.6 points to 44.8.
New orders, export orders, output, raw-material purchases, finished-goods inventories and imports all contracted. Employment, however, edged up.
Construction also returned to contraction after expanding in August. Its PMI dropped 3.8 points to 48.5, as new business and construction activity declined.
The services sector remained just below the expansion threshold, with its PMI easing 0.2 points to 49.0 amid contractions in new business and overall business activity.
Agriculture remained the only sector in expansion, although its PMI also slowed, falling 1.3 points to 55.2.
The sector has now remained in expansion for 13 consecutive months, with new business, business activity and employment continuing to grow, albeit at a slower pace. Input costs, however, continued to rise.
Businesses expressed cautious and mixed expectations about the coming months. Some firms expect demand to improve with the approaching winter and business season, supported by confirmed orders and reliable buyers.
But higher fuel prices, rising raw-material and operating costs, weaker consumer purchasing power, shortages of electricity and gas, and difficulties in accessing bank finance remain major concerns.
Dr M Masrur Reaz, chairman and chief executive officer of Policy Exchange Bangladesh, said weakness in manufacturing, construction and services continued to weigh on economic momentum.
He said the expansion in agriculture was providing some stability, but stronger domestic and export demand, reliable energy supplies, easier access to finance and measures to contain rising costs would be needed to restore momentum.
The PMI survey also found signs of expansion across all four sectors in their outlook for the coming months, indicating cautious optimism.
The strength of the recovery, however, will depend largely on domestic demand, energy availability, access to finance and production costs, the report said.