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According to the Purchasing Managers’ Index (PMI) report, the construction sector has been experiencing contraction for the past three months. As a result, companies in the steel industry — one of the sector’s key components — are struggling to sustain their businesses.
The information emerged at a discussion organised yesterday (13 May) in Gulshan, Dhaka, by the Metropolitan Chamber of Commerce and Industry (MCCI), one of the country’s leading business bodies, and Policy Exchange Bangladesh (PEB).
MCCI and PEB jointly publish the PMI report every month. The report is prepared through surveys conducted on the country’s four main economic sectors — agriculture, manufacturing, construction and services. Under the index, which is measured on a scale of 100, a score below 50 indicates contraction in a sector, while a score above 50 signifies expansion.
According to the latest report published this month, the PMI for April rose by 1.1 points from the previous month to stand at 54.6 points. During the month, the agriculture sector recorded an index of 70.7, the manufacturing sector 56.9, and the services sector 51.8.
Although these three sectors remained in expansion territory, the construction sector alone continued to contract. In April, the sector’s index stood at 44.6 points.
Not only in April, but according to the PMI report, the construction sector has been losing momentum for the past three months. The sector was last in expansion territory in January, when it scored 58.2 points. It then fell to 49.2 points in February and remained at the same level in March. However, in April the sector experienced a significant decline, dropping to 44.6 points.
At the discussion titled “Discussion Session on the Purchasing Managers’ Index for Bangladesh” held yesterday, Hasnat Alam, Senior Manager at PEB, delivered a presentation on the process and significance of preparing the PMI index. He said: “While some sectors contracted in April, agriculture and manufacturing expanded. As the construction sector has become largely stagnant, companies in the steel sector are struggling to keep their businesses afloat.”
Hasnat Alam further explained: “To determine the PMI index, we ask several questions to top executives or owners of different companies. Usually seven to eight questions are asked. This helps us understand whether a company has increased employment compared to before, and the extent of growth in imports and exports. When such information from companies across different sectors is compiled, it presents an overall picture of the country’s economy.”
Delivering the welcome address at the event, PEB Chairman and Executive Director Dr Masrur Riaz said: “The PMI provides regular information on the dynamism of the country’s economy. Various important institutions, including the central bank, the Ministry of Finance, donor agencies and embassies, prepare their reports based on the PMI. It helps both the government and the private sector in making important decisions and planning for the future.”
The meeting was chaired by MCCI Secretary General and Chief Executive Officer (CEO) Faruq Ahmed. Special guest Stephen Poh, Executive Director of the Singapore Institute of Purchasing and Materials Management (SIPMM), was also present at the event. He said: “The PMI has been in operation in Singapore for two decades. It is now considered important by the government, agencies and the media.”
Stephen Poh added: “Indices play a very important role in providing an understanding of the economy. Although the PMI was introduced in Bangladesh only recently, I hope it will reach that level within a very short time.”
Others present at the event included M Enamullah Sayeed, Senior General Manager of Robi Axiata PLC; Ahmed Zahid Erdem, Finance Integration Leader at Coca-Cola Beverages Bangladesh Limited; Rafiqul Islam, Deputy General Manager of Pioneer Insurance PLC; and Md Monirul Islam, Additional Managing Director of National Insurance PLC, among others.
