Bangladesh economy contracts in September as PMI falls to 48.6

Bangladesh’s economic activity slipped into contraction in September as weakness in manufacturing, construction and services outweighed continued expansion in agriculture. The country’s overall Purchasing Managers’ Index (PMI) fell 1.3 points from August to 48.6, according to the latest PMI report released jointly by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and Policy Exchange Bangladesh (PEB).

A PMI reading below 50 indicates contraction, while a reading above 50 signals expansion.

The September PMI, released on October 7, showed that manufacturing remained the weakest-performing major sector, while construction returned to contraction after expanding in August. Services also remained in marginal contraction for a second consecutive month.

Agriculture, however, continued its expansion for the 13th consecutive month, although its PMI declined 1.3 points to 55.2.

The manufacturing PMI dropped 2.6 points to 44.8. New orders, new export orders, output, stocks of input purchases, finished goods and imports all contracted at a faster pace during the month. Employment, however, returned to marginal expansion, while input prices continued to rise.

Order backlogs in the manufacturing sector recorded a strong contraction, although supplier delivery times increased at a slower rate.

The construction sector’s PMI fell 3.8 points to 48.5 in September, returning to contraction after expanding in August. New business and construction activity declined, while employment remained unchanged. Input costs continued to rise strongly, though at a slightly slower pace. Order backlogs, meanwhile, returned to expansion.

The services sector recorded its second consecutive month of marginal contraction, with its PMI declining 0.2 points to 49.0. New business and business activity returned to contraction, while employment declined at a slower pace. Input costs continued to rise strongly, and order backlogs remained in contraction.

The report said businesses maintained a cautious and mixed outlook for the coming months. Some firms expected activity to improve on the back of confirmed orders, reliable buyers and stronger seasonal demand during the approaching winter and peak business season.

 “September’s PMI shows that Bangladesh’s economic dynamism remains under pressure, as weakness in manufacturing, construction and services weighed on overall performance,” said Dr M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh.