Bangladesh economy maintains expansion in December as PMI inches up

Bangladesh’s overall Purchasing Managers’ Index (PMI) rose slightly in December, indicating a modestly faster pace of economic expansion, supported mainly by continued growth in agriculture, manufacturing and services, according to the latest PMI report released on Tuesday.

The PMI increased by 0.2 points from November to 54.2 in December, remaining comfortably above the 50-point mark that separates expansion from contraction.

Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh (PEB) jointly released the report on Wednesday.

The Bangladesh PMI is designed to provide timely and reliable insights into the country’s economic conditions to support decision-making by businesses, investors and policymakers.

The index was developed by MCCI and Policy Exchange with support from the UK government and technical assistance from the Singapore Institute of Purchasing and Materials Management (SIPMM).

According to the report, the slight improvement in December reflects sustained expansion in agriculture, manufacturing and services while the construction sector slipped back into contraction after three months of growth.

The agriculture sector recorded its fourth consecutive month of expansion, with growth accelerating further in December.

Stronger expansion was seen in new business, business activity, employment and input costs.

However, order backlogs contracted at a faster pace, indicating continued pressure on fulfilment capacity.

Manufacturing remained in expansion for the 16th consecutive month, although the pace of growth eased slightly from November. Most key indicators, including new orders, new export orders, factory output, input purchases, imports, input prices, employment and supplier deliveries, stayed in expansionary territory. The finished goods index returned to expansion, while order backlogs continued to contract, though at a slower rate.

In contrast, the construction sector returned to marginal contraction in December. The new business index showed a faster rate of decline, while construction activity and employment grew more slowly.

Input costs increased at a slightly faster pace, and order backlogs fell for the fifth consecutive month, although the rate of contraction moderated.

The services sector posted its 15th straight month of expansion, with growth edging up slightly. Employment and input costs remained in expansion, but new business, business activity and order backlogs were in contraction, reflecting uneven demand conditions across the sector.

The report noted that overall business sentiment remained subdued amid political uncertainty, seasonal demand slowdown, rising production costs, price volatility and weak sales. However, many respondents expressed expectations of gradual improvement from early next year.

Looking ahead, the future business index showed slower expansion across agriculture, manufacturing, construction and services, pointing to cautious optimism among businesses.

Dr M Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh, said the latest PMI data indicate marginal economic expansion, driven largely by strong agricultural performance.

“Manufacturing has experienced a second consecutive month of slowdown, while the construction sector has reverted to contraction. However, the future business index remains in expansion across all major sectors, suggesting continued optimism and growth momentum in the post-election period,” he said.