Bangladesh's Purchasing Managers’ Index (PMI) for June has recorded a sharp slowdown, falling 9.9 points from May to settle at 52.9, as manufacturing and construction sectors slipped back into contraction while agriculture and services continued to expand at a softer pace, according to a report released on Tuesday.
The Bangladesh PMI, jointly compiled by the Metropolitan Chamber of Commerce and Industry (MCCI), and Policy Exchange Bangladesh (PEB), is developed with support from the UK government and technical assistance from the Singapore Institute of Purchasing & Materials Management (SIPMM).
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The index is designed to provide timely and reliable insights into the country's economic health to help businesses, investors and policymakers make informed decisions.
Commenting on the findings, M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, said the June reading suggested Bangladesh's economy remained in expansion overall, but with clear sectoral divergence.
He said agriculture and services continued to grow, though more slowly, while manufacturing returned to contraction on weaker orders, exports, employment and supplier deliveries.
Construction also contracted amid softer activity and new business, he said, adding that long Eid holidays, the onset of the monsoon and fading pre-Eid demand had weighed on business conditions during the month.
The agriculture sector recorded its tenth consecutive month of expansion in June, although growth moderated from May. New business, business activity, employment and input costs all continued to expand, while the order backlogs index remained in contraction for the second straight month.
The manufacturing sector returned to contraction after two months of expansion, dragged down by weaker new orders, new exports, employment, supplier deliveries and order backlogs. Factory output, input purchases and imports continued to grow, though at a slower pace, while input prices accelerated and the finished goods index swung back into expansion.
The construction sector also reverted to contraction after posting expansion in May, with new business, construction activity and employment all falling back. Input costs and order backlogs, however, continued to expand at a faster pace within the sector.
The services sector expanded for the 21st consecutive month in June, though growth slowed across new business, business activity, employment and input costs, while the order backlogs index contracted at a faster rate.
Looking ahead, the Future Business Index points to continued expansion in agriculture, construction and services, while manufacturing is expected to return to expansion, reflecting cautious optimism about business conditions in the coming months.
Respondents across major economic sectors described business conditions in June as challenging amid rising production costs and weaker market conditions. Many firms cited higher LPG and fuel prices, rising transportation and operating costs, and increasing labour expenses as key pressures squeezing profit margins.
Several businesses also pointed to financial constraints, disruptions from ongoing road construction activities, and concerns over the recently imposed 15 percent VAT, which they said had raised the cost of doing business. Agricultural respondents flagged weather-related uncertainties affecting production and seasonal demand, while some firms noted that local economic activity remained subdued.
Despite the challenges, respondents expressed hope that improvements in the business environment, stable energy supplies and supportive government policies would help strengthen business confidence and economic activity in the months ahead.
Several respondents also recommended maintaining a representative and high-quality respondent panel to further enhance the reliability of the Bangladesh PMI.
The report was signed by Farooq Ahmed, Secretary-General and CEO of MCCI, and M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh.