Manufacturing activities expanded at a slower rate in January 2020 recording an index value of 54.0 mainly due to the slower expansion in New Orders and Stock of Purchases.
New Orders, Production and Stock of Purchases sub-indices expanded at a slower pace particularly in the manufacturing of food and beverages sector with the decreasing demand after the festival season.
Further, a slowdown in Stock of Purchases in textile & wearing apparel sector could be observed due to Chinese New Year holidays.
The Employment contracted during the month due to the leaving of employees from their jobs for better paid employments.
Meanwhile, a significant lengthening of Suppliers’ Delivery Time was experienced, especially in manufacturing of textile and wearing apparel sector.
Although, lengthening of Suppliers’ Delivery Time usually indicates higher demand for materials with the expanding manufacturing activities, the New Coronavirus (COVID-19) outbreak in China since early January 2020 has mainly caused this delay. Further, many respondents in this sector highlighted that their import orders for materials from China have been delayed indefinitely due to the same reason.
All sub-indices of PMI Manufacturing, except Employment, exceeded the threshold of 50.0 (neutral) signalling an overall expansion in manufacturing activities during the month of January 2020.
Although the manufactures, especially related to appeal sector, cautioned that New Coronavirus outbreak would disrupt the global supply chain, overall expectations for manufacturing activities for the next three months remain slightly improved compared to last month.
Meanwhile, Services sector continued to grow, yet at a slower pace, in January 2020, supported by the expansion in New Businesses, Business Activity, Employment and Expectations for Activity.
Business Activities in accommodation, food and beverage; and telecommunication sub sectors expanded due to peak season of. tourism and tax reductions introduced by the government, respectively.
Further, Business Activities in financial services; transportation; and wholesale and retail trade sub sectors also recorded a growth in January 2020, compared to the previous month.
However, overall Business Activity expanded at a slower pace since the activity level in January 2020 is lower than the seasonally high activity level prevailed in December 2019. Meanwhile, Employment increased in January 2020 after the continuous decline for nine consecutive months due to new recruitments at the beginning of the year.
This increase in Employment also contributed towards the decline in Backlogs of. Work in January 2020. Moreover, increase in Expectations for Activity in accommodation, food and beverage and transportation sub sectors eased in January 2020 due to the impact of New Coronavirus outbreak as there would be a decline in arrival of tourists and shipments from China.