Market Update: Economic activities might have expanded in February: PMI – Full Analysis

Bangladesh economy might have expanded in February this year, supported by stronger growth in the agriculture, manufacturing and services sectors, according to the latest Bangladesh Purchasing Managers’ Index (PMI) published yesterday.

In February, the PMI reading increased by 1.8 points from the previous month to 55.7, the highest in four months, indicating a faster pace of expansion. The construction sector returned to contraction as its score fell to 49.2 in February from 58.2 in January.

The index is measured within a range of 0 to 100. A PMI of more than 50 represents expansion compared to the previous month, while a reading of under 50 represents contraction.

A PMI of 50 indicates that there is no month-on-month change in the selected market.

“February PMI indicates a modest, seasonally driven uptick in economic dynamism. It suggests a slight increase in economic activity, reflecting stronger demand in agriculture and services linked to Ramadan-related consumption,” said M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh (PEB).

The Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and PEB have jointly been preparing the PMI since February 2024 to offer timely and accurate insights into the country’s economic health and help businesses, investors and policymakers make informed decisions.

February data showed that the agriculture sector recorded its sixth consecutive month of expansion, and at a faster rate. The agriculture PMI rose to 64.5 in February from 53 the previous month.

The manufacturing sector remained in expansion for the 18th consecutive month, with growth accelerating during the month, according to the PMI.

“Continued expansion was recorded across key indicators, including new orders, factory output, imports, input prices and supplier deliveries,” it said.

The manufacturing PMI rose to 53 percent in February from 52.1 percent in January.

The services sector recorded its 17th consecutive month of expansion, with growth accelerating during the month.

Looking ahead, the future business index indicated continued expansion across all key sectors, namely agriculture, manufacturing, construction and services, reflecting sustained improvements in business expectations,” said MCCI and PEB in a press statement.

Reaz said, “However, escalating military conflict in the Middle East poses significant downside risks to growth expectations.”

MCCI and PEB said respondents across Bangladesh’s key economic sectors described a business environment marked by modest seasonal optimism ahead of Ramadan and Eid-ul-Fitr, alongside continued pressure from elevated input costs and uneven sectoral performance.

“While stronger festive demand is expected to support sales — particularly in the services and retail sectors — firms remain concerned about margin compression driven by high raw material, labour and utility costs.”

The report said business expectations remain cautiously positive; however, the construction sector and certain labour market indicators continue to show signs of weakness.

Overall, the near-term outlook appears seasonally supportive, though broader growth prospects remain constrained by persistent inflationary pressures, sector-specific bottlenecks and external economic risks.