Bangladesh’s economy might have expanded in August: PMI

Bangladesh's economy may have expanded in August, but at a slower pace, as the Purchasing Managers' Index (PMI) slipped, reflecting weaker momentum across key sectors, with agriculture and construction declining while manufacturing and services recorded slower growth.

The PMI is a forward-looking indicator used globally to gauge economic direction. A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

The index stood at 58.3 in August, down 3.2 points from July, according to the latest report by the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI), and Policy Exchange Bangladesh (PEB).

"The latest PMI readings indicate that the overall Bangladesh economy continued to expand for 11 consecutive months, but at a slower rate," said M Masrur Reaz, chairman and CEO of PEB.

The agriculture sector contracted after 10 months of expansion, with new business, activity, and input costs slowing, while order backlogs and employment also declined.

The manufacturing sector, meanwhile, registered its 12th consecutive month of expansion, though at a slower pace.

Growth in new orders, exports, factory output, and supplier deliveries was offset by contractions in order backlogs and employment, which declined for the third month in a row.

"Agriculture and construction contracted due to disruptions caused by the prolonged monsoon, while manufacturing and services also grew at a weaker pace, as reflected in the dip in export earnings in August," said Reaz.

Construction, which had expanded for the first time in July, slipped back into contraction in August.
Despite gains in new business, activity, and input costs, the sector faced contractions in order backlogs and employment for the fourth consecutive month.

The services sector marked its 11th month of expansion, though growth slowed. Business activity, new orders, employment, and input costs increased, but order backlogs contracted.

Looking ahead, future business expectations weakened in agriculture, manufacturing, and construction, though the services sector showed stronger optimism.

Respondents cited political instability, seasonal slowdown, and rising costs as factors weighing on activity, though some sectors benefited from sales linked to past orders and ongoing projects.

The MCCI and PEB began publishing the PMI in January last year. Initiated by the UK government, it covers over 500 private sector firms across agriculture, manufacturing, construction, and services.