Manufacturing PMI increased at a slower rate in February 2020 recording an index value of 53.6 mainly due to the slower expansion in New Orders and Employment, while expectations for next three months decreased significantly due to COVID-19outbreak.
New Orders and Employment slowed down, particularly in the manufacturing of textile and wearing apparel sector with the decrease in global demand.
Moreover, many respondents in the textile and wearing apparel sector highlighted that their raw material imports have been delayed due to supply side issues arose from the COVID-19 outbreak.
Accordingly, Suppliers’ Delivery Time lengthened further during the month of February due to the delays in shipments in response toCOVID-19 outbreak thereby causing an increase in the overall index. Meanwhile, marginal increase in Production and Stock of Purchases in food and beverages sector could be observed in preparation to meet the upcoming seasonal demand.
All sub-indices of PMI Manufacturing, except Employment exceeded the threshold of 50.0 (neutral) signaling an overall expansion, yet at a slower rate, in manufacturing activities during the month of February 2020.
The manufacturers, especially related to apparel sector, cautioned that COVID-19 outbreak would disrupt the global supply chain.
Services sector expansion slowed down in February 2020, compared to January 2020, underpinned by the slower expansion observed in New Businesses, Business Activity and Expectations for Activity due to the impact of COVID-19 outbreak.
Business Activities in accommodation, food and beverage; and transportation sub-sectors declined due to the impact of COVID-19 outbreaks there has been a decline in arrival of tourists and shipments from China in February 2020.
Further, financial services and professional services sub-sectors also recorded a decline compared to the previous month. As a result, overall Business Activity in the Services sector expanded at a slower pace in February 2020.
Meanwhile, expansion in New Businesses also declined compared to the previous month across most of the sub-sectors and the decline was notable in transportation and other personal services sub-sectors.
Expectations for Activity eased significantly in February 2020, mainly in accommodation, food and beverage and transportation sub-sectors over the distress on the possible impact of COVID-19 outbreak.
Further, respondents engaged in wholesale and retail trade activities, particularly, in international trade, and financial services activities also cited that they expect a decline in business activities in next few months.
Meanwhile, the ease in Business Activity and Expectations for Activity steered towards the decline in Employment, which consequently led towards a slower decline in Backlogs of Work in February 2020.
Global Manufacturing PMI dips
The global manufacturing PMI recorded a value of 47.2 in February 2020 with a decrease of 3.2 index points from January 2020, which is the steepest contraction in over a decade as COVID-19 outbreak hits supply chains and demand. Manufacturing PMI of China contracted, USA and India slowed down in February 2020while that of UK improved. Russia and Euro zone PMIs remained in the negative territory.
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