The August reading of the Bangladesh Purchasing Managers’ Index (PMI) fell by 7.9 points from the previous month to 49.9, indicating a slight contraction in overall economic activity.
The decline was driven mainly by a slowdown in manufacturing and services, both posting marginal contraction readings. Agriculture continued to expand while construction sector reverted to expansion.
The agriculture sector recorded its twelfth consecutive month of expansion, rising by 1.3 points to 56.5 in August.
New business and business activity remained in expansion, while employment increased.
Input costs continued to expand strongly, though at a slightly slower pace, while order backlogs remained in contraction.
The manufacturing sector moved to contraction, declining sharply by 18.0 points to 47.4 in August.
New orders, new export orders, output, stocks of input purchases, imports and employment all reverted to contraction, while input prices continued to expand at a faster pace.
Order backlogs remained in contraction, but at a slower pace, and Supplier delivery time remained unchanged.
The construction sector moved to expansion, reaching 52.4. Construction activity and employment moved to expansion, while new business recorded slower contraction.
Input costs recorded faster expansion, whereas order backlogs moved into contraction.
The services sector recorded contraction at 49.2 for the first time after 22 months, declining by 6.8 points.
New business and business activity continued to expand, though at slower rates, while employment contracted sharply. Input costs continued to expand, though at a slower pace, and order backlogs registered a slower contraction.
Respondents’ views during the reporting period reflected cautious yet positive expectations regarding business conditions.
Many respondents described their current business situation as satisfactory and expressed hope for further improvement in the coming months.
At the same time, they highlighted the need to reduce business costs, expand financial support, and ensure a more supportive policy environment.
Respondents from the manufacturing sector noted difficulties in accessing necessary funds through banking channels, shortages in electricity and gas supply, and a slowdown in business due to reduced orders in the ready-made garment sector.
They emphasized the need to lower fuel prices and production costs. Respondents from the services sector called for greater financial support, lower electricity bills and operating costs, and reductions in income tax and other taxes.
Agricultural respondents also highlighted the need to reduce the prices of agricultural inputs, particularly pesticides.
Overall, respondents’ views reflect cautious but positive expectations for future business conditions.
Improvements in energy supply, easier access to finance, better control of operating costs, and business-friendly tax and policy support could further strengthen business confidence and accelerate the recovery of economic activity.
The Future Business Index indicates slight decline in optimism across all sectors.
"The August PMI reading of 49.9 indicates that Bangladesh’s economic activity remained broadly near the neutral threshold, despite temporary pressures on manufacturing and services. Agriculture continued expanding, while construction returned to growth, highlighting underlying economic resilience. The moderation in manufacturing partly reflects weaker monthly exports and temporary energy disruptions associated with LNG infrastructure maintenance. Looking ahead, improved energy availability, stronger export demand and supportive measures to restore business confidence can help the economy regain momentum and place it on a firmer growth trajectory, said M Masrur Reaz, chairman and CEO, Policy Exchange Bangladesh.