Manufacturing PMI improved in January 2022 recording an index value of 58.7 with an increase of 0.6 index points compared to December 2021. This was mainly attributable to the improvements recorded in New Orders, Production together with the recovery in Employment during the month. Further, Stock of Purchases increased while Suppliers’ Delivery Time lengthened on a month-on-month basis. 

The expansion in New Orders, Production and Stock of Purchases, particularly in the manufacture of textile & wearing apparel and food & beverage sectors, have mainly contributed to the improvement in the PMI. Although Employment sub-index recovered to positive territory in January 2022, employment sub-index with respect to the manufacture of textile & wearing apparel sector continued to decline, reflecting the difficulty in attracting employees to the sector. Meanwhile, the Stock of Purchases increased in line with the expansion in New Orders and Production.

The deficit in the trade account widened in December 2021 compared to a year earlier, mainly due to excessive surge in imports recording the highest ever monthly import expenditure, despite persistently high earnings from exports that exceeded US dollars 1.0 billion for the seventh consecutive month. During the year 2021, the trade deficit widened notably, driven by considerable increase in imports that outpaced the growth in exports. Tourist arrivals continued the growth momentum in December with a notable increase over the previous month. Meanwhile, workers’ remittances recorded a month-on-month growth in December 2021, mainly reflecting the response to incentive scheme introduced for remittances and the seasonal increase. The weighted average spot exchange rate in the interbank market continued to hover around Rs. 201 per US dollar during the month.