The Manufacturing Sector PMI decreased to 57.6 index points in June 2018 from 60.6 index points observed in the previous month and was in line with the pattern observed in the previous years. The significant drop in Production especially that of manufacturing of food, beverages and tobacco products largely contributed for this decrease. Further, New Orders and Stock of Purchases also decreased during the month. However, the overall Employment increased with the new recruitments in manufacturing of textiles, wearing apparel, leather and other related products. Meanwhile, the time taken by the suppliers to deliver materials increased due to unfavourable weather conditions prevailed during the month and the tightened environmental regulations in China. As a result, the Suppliers’ Delivery Time lengthened. Overall, all the sub-indices of PMI recorded values above the neutral 50.0 threshold in June 2018 signalling an overall expansion in manufacturing activities yet at a slower phase compared to May 2018.

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 05 July 2018, decided to maintain policy interest rates at their current levels. Accordingly, the Standing Deposit Facility Rate (SDFR) and Standing Lending Facility Rate (SLFR) remain at 7.25 per cent and 8.50 per cent, respectively. The Board’s decision is consistent with stabilising inflation at mid-single digit levels in the medium term, thereby contributing to a favourable growth outlook for the Sri Lankan economy.