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Manufacturing Sector Resumes Expansion While Services Continue Growth in May

The manufacturing sector resumed its expansion in May, while services activities continued their growth, as indicated by the Purchasing Managers’ Index (PMI). This suggests that economic activities remain robust, supported by lower prices and interest rates.

The manufacturing sector PMI reached an index value of 58.2 in May, rebounding from 42.0 in April, indicating that manufacturing activities are expanding. The April contraction was an anomaly due to extended holidays from the traditional new year celebrations. In May, respondents attributed the significant increase in production activities to the greater number of working days.

All sub-indices under the manufacturing PMI, except employment, recorded growth, with employment nearing the neutral level. In the PMI, an index value of 50.0 distinguishes between expansion and contraction.

The new orders and production sub-indices, particularly in the food and beverage manufacturing sector, saw notable increases, signalling recovering consumer demand. Although the sector remains optimistic for the next three months, some respondents expressed concerns about container availability in global shipping.

The services sector recorded an index value of 55.0 in May, slightly down from 56.7 in April, but still indicative of continued expansion. Growth was driven by various business sectors, with financial services benefitting from declining interest rates. Transportation saw significant growth, followed by telecommunications, real estate, health, and professional services.

However, there was a decline in the accommodation and food and beverage sectors due to a drop in tourist arrivals in May compared to April. Additionally, business activities in wholesale and retail trade decreased after the festive season ended.

Sector participants expressed optimism for sustained business growth at higher levels over the next three months, due to favorable macroeconomic conditions.

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