The Manufacturing Sector PMI recorded an index value of 56.2 in January which is a decrease of 2.1 index points compared to December 2016. The deceleration in PMI indicate that the manufacturing activities expanded at a moderate pace in January 2017 largely attributable to post seasonal realignment of business plans ahead as reflected in Production and New Orders sub-indices. The Stock of Purchases sub-index increased in January indicating an accumulation of stocks mainly as a precaution to face possible delays of supply of materials which is also associated with the lengthening of Suppliers’ Delivery Time. The Employment sub-index also increased compared to the previous month. Overall data points to an expansion where all the sub-indices are above the neutral 50.0 threshold. The expectations for activities indicated an improvement for the next three months.

Sri Lanka’s external sector recorded a modest performance in October 2016 with a deterioration in the trade deficit amidst continued growth in tourist earnings. The trade deficit widened in October as a result of higher import expenditure despite a marginal growth in export earnings. The significant increase in import expenditure in October 2016 was primarily due to the import of a dredger vessel for the Port City construction project. Meanwhile, workers’ remittances were marginally higher while a healthy growth was observed in earnings from tourism during October 2016. Although inflows to the Colombo Stock Exchange (CSE) and long term loan proceeds to the government supported the financial account of the Balance of Payments (BOP), the government securities market witnessed a net outflow during October 2016.

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