The Manufacturing Sector PMI contracted recording an index value of 45.5 in April with a decline of 20.1 index points from March. The new year holidays in April dragged back the manufacturing activities following the peak level of activities observed in the previous month, and was in line with the pattern observed in previous years. The contraction of PMI in April was largely attributable to the contraction in the Production and New Orders sub-indices. Stock of Purchases and Employment sub-indices also decreased during the month. Moreover, lengthening of the Suppliers’ Delivery Time sub-index slowed down during the month which partially indicates that suppliers are less busy. Respondents highlighted that increase in unauthorised absentees following new year holidays disturbed the manufacturing activities. Moreover, respondents, especially in the Textiles and Apparel sector, highlighted difficulties in finding both skilled and unskilled workers. However, the Expectation for activities indicates an improvement for the next three months.  

The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 10 May 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 aims at stabilising inflation in mid-single digit levels in the medium term, thereby contributing to a favourable growth outlook for the Sri Lankan economy.