Bangladesh’s Purchasing Managers’ Index (PMI) recorded a slower expansion in August, falling 3.2 points from July to 58.3, according to a report released on September 7 by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh (PEB).

The reading reflected weaker growth in both manufacturing and services, while agriculture and construction slipped back into contraction following months of expansion.

Respondents cited political instability, seasonal slowdown and rising costs as key challenges, though some sectors benefited from past orders and ongoing projects.

Despite the dip, the economy has now registered 11 consecutive months of expansion.

The PMI, developed with UK government support and technical input from Singapore’s Institute of Purchasing & Materials Management, is seen as a key tool for tracking Bangladesh’s economic momentum.

The agriculture sector reverted to a contraction after recording its 10th month of expansion.

The sector posted slower expansion rates for the indexes of new business, business activity, and input costs, and the order backlogs index reverted to a contraction.

The employment index posted a contraction reading for the third month, but at a slower rate.

The manufacturing sector posted its 12th month of expansion, but at a slower rate. The sector posted expansion readings for the indexes of new orders, new exports, factory output, input purchases, finished goods, imports, input prices, and supplier deliveries.

The order backlogs index reverted to a contraction, and the employment index posted a contraction reading for the 3rd month.

The construction sector reverted to a contraction after posting a first-time expansion reading in the previous month.

The sector posted expansion readings for the indexes of new business, construction activity, and input costs.

The order backlogs index reverted to a contraction, and the employment index posted a contraction reading for the 4th month.

The services sector posted its 11th month of expansion, but at a slower rate. The sector posted expansion readings for the indexes of new business, business activity, employment, and input costs, but the order backlogs index reverted to a contraction.

In terms of the future business index, slower expansion rates were recorded for the indexes of agriculture, manufacturing, and construction sectors, whereas the services sector posted a faster expansion rate.

Respondents highlighted that business activity remains weak due to political instability, seasonal slowdown, and rising costs, though some sectors saw temporary sales gains from past orders and ongoing projects.

‘The agriculture and construction sectors recorded contraction readings due to disruptions caused by prolonged monsoon, whereas the manufacturing and services sectors recorded slower expansion, as reflected in the dip in export earnings in August,’ said M Masrur Reaz, Cchairman and CEO of Policy Exchange Bangladesh.

The PMI is a vital and globally recognised economic indicator. Its monthly, survey-based methodology, clear interpretation (with readings above 50 indicating expansion and below 50 indicating contraction), and detailed sub-indices make it an indispensable tool for understanding and forecasting economic health.

It ultimately aids businesses and stakeholders in navigating changing economic landscapes.