Economy might have expanded faster in May: PMI 

Bangladesh's economy showed stronger growth in May as the Purchasing Managers' Index (PMI) rose by 6 points from that of April to 58.9, rebounding from a three-month slowdown since February, according to the latest PMI report.

The PMI is a forward-looking indicator used globally to gauge economic direction. A reading of over 50 indicates expansion, and of less than 50 indicates contraction.

The higher PMI reading was driven by accelerated activity in agriculture, manufacturing, and services, while the construction sector recorded no change in its pace of expansion.

The agriculture sector posted its eighth consecutive month of growth, with faster expansion across new business, business activity, employment, and input costs.

Notably, the order backlog index, which had earlier shown contraction, returned to an expansionary trend, as per the PMI report jointly released by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh (PEB).

Manufacturing continued its positive momentum, expanding for the ninth straight month and at a quicker pace.

Most indexes, including new business and employment, rose, though the order backlogs index remained in contraction, albeit at a slower rate, for the tenth month in a row.

The construction sector marked its sixth consecutive month of expansion but showed no growth from April.

While construction activity accelerated and order backlogs returned to expansion, both new business and employment reverted to contraction. Input costs rose, though at a slower pace.

"The latest PMI readings indicate that the overall Bangladesh economy grew at a faster rate," said M Masrur Reaz, chairman and CEO of the PEB.

Photo: MCCI

The growth was against the backdrop of "export-led manufacturing buoyancy and uptake in agriculture and its supply chain ahead of the Eid festival", he said.

"The construction sector, however, remains the only sector without any growth in expansion," he said.

Services experienced their eighth straight month of expansion, and at a faster rate.

New business and input costs grew more rapidly, although employment growth decelerated. Business activity and order backlogs, previously subdued, shifted back into expansionary territory.

In terms of future expectations, the agriculture sector saw a faster expansion in its future business index.

In contrast, slower expansion was recorded across manufacturing, construction, and services.

The MCCI and PEB began publishing the PMI in January last year. Initiated by the UK government, it takes into account over 500 private sector firms across agriculture, manufacturing, construction, and services.