Bangladesh PMI falls to 48.6 as manufacturing, construction and services contract

Business activity in Bangladesh’s manufacturing sector weakened in September, with declines in new orders, production, inventories of raw materials and finished goods, and imports weighing on performance.

The services sector remained in contraction, while construction returned to negative territory. Agriculture was the only major sector to maintain expansion, but slower growth across manufacturing, construction and services pushed overall economic activity further into contraction, according to the latest Purchasing Managers’ Index (PMI).

Released on Wednesday, 7 October, the PMI dropped to 48.6 in September from 49.9 in August, signalling a further deterioration in private-sector business conditions. The monthly index has reflected fluctuating economic activity over the past two years.

The report was jointly published by the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and Policy Exchange Bangladesh (PEB).

The survey draws on responses from senior executives at 400 private-sector companies operating across agriculture, trade, construction, manufacturing and services. It tracks key indicators, including raw material purchases, new orders, employment and other measures of business activity.

The PMI ranges from 0 to 100, with readings above 50 indicating expansion and those below 50 signalling contraction.

Businesses surveyed in September identified several challenges, including repeated fuel price increases, rising raw material and operating expenses, weak consumer purchasing power, electricity and gas shortages, and limited access to bank financing.

Entrepreneurs said persistent economic uncertainty had complicated business planning and warned that conditions could deteriorate further if fuel prices and other cost pressures remained elevated.

According to the report, business confidence continued to be subdued. Respondents said a sustained recovery would depend on stronger domestic demand, reliable energy supplies, improved access to finance and lower operating costs.

Some businesses, however, anticipated better conditions in the coming months, citing confirmed orders, dependable buyers and expectations of increased demand during the winter and the peak business season.

Manufacturing recorded the sharpest deterioration among the major sectors. Its PMI fell 2.6 points to 44.8 in September from 47.4 in August, making it the largest contributor to the overall decline.

The construction PMI dropped 3.8 points to 48.5, indicating a return to contraction after the sector's previous performance.

Services remained in contraction for a second consecutive month, with its PMI declining to 49. New business and overall activity in the sector also slipped into contraction, although the pace of employment losses eased slightly.

Agriculture continued to expand for the 13th consecutive month. However, its PMI fell 1.3 points from August to 55.2, reflecting slower growth in new business, activity and employment.

Commenting on the findings, Policy Exchange Bangladesh Chairman M Masrur Reaz said the September PMI highlighted continued pressure on the economy from weakness in manufacturing, construction and services.

He noted that sustained expansion in agriculture had provided some stability amid the broader slowdown.

Reaz added that moderately positive expectations across all sectors offered a potential foundation for economic recovery.

He stressed the need to strengthen domestic and export demand, ensure dependable energy supplies, ease financing constraints and contain rising business costs to revive economic activity and improve private-sector confidence.