Bangladesh’s business activity regained momentum in July, with the Purchasing Managers’ Index (PMI) rising 4.9 points to 57.8 from a sharp decline to 52.9 in June.
Thanks to a sharp manufacturing rebound while construction showed slower contraction.
However, the July reading was still below May’s 62.8, pointing to an improvement that has yet to regain the stronger pace seen earlier in the year.
Manufacturing jumped to 65.4 from 48.8, services remained in expansion and agriculture continued to expand at a slower pace.
Construction improved to 49.3 from 40.2 but stayed below the 50-point threshold that separates contraction and expansion.
PMI is a monthly survey-based gauge of the direction and pace of business activity, designed to provide an early signal before conventional economic data.
Bangladesh’s index covers agriculture, manufacturing, construction and services and tracks new business, output, employment, input purchases, supplier deliveries, input prices and order backlogs.
A reading above 50 signals expansion from the previous month, below 50 indicates contraction and 50 represents broadly unchanged activity. The further the index moves from 50, the stronger the reported rate of change.
The Bangladesh PMI is produced by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh (PEB), with support from the UK government and technical support from the Singapore Institute of Purchasing & Materials Management.
Manufacturing provides the lift
Manufacturing accounted for most of July’s improvement, with its PMI rising 16.6 points to 65.4. New orders, new export orders, output, input purchases, imports, employment and supplier deliveries all expanded, indicating stronger demand alongside increased factory activity.
The rebound coincided with Bangladesh recording its highest monthly export earnings in 12 months, according to the PMI report. Input prices continued to rise, however, while order backlogs remained in contraction.
The sector has been volatile: its PMI fell to 49.7 in March, recovered to 56.9 in April and 64.1 in May, dropped to 48.8 in June again before rebounding sharply in July.
Agriculture and services hold up
Agriculture recorded its 11th consecutive month of expansion, although its PMI fell 9.6 points to 55.2 from 64.8. New business and activity remained in expansion, but employment moved into marginal contraction.
Input costs continued to expand strongly, and order backlogs remained in contraction.
Services extended its expansion streak to 22 months, with its PMI rising 1.4 points to 56.0. New business and employment expanded faster, business activity remained in expansion, and the contraction in order backlogs eased.
Construction remains the weak link
Construction was the only major sector still contracting. Its PMI rose 9.1 points to 49.3, as new business, construction activity and employment contracted at slower rates. Input costs and order backlogs continued to expand.
The weakness matters beyond the sector itself because construction is an important channel for domestic investment. A manufacturing rebound can support exports and industrial output, but sustained investment also requires businesses to expand productive capacity and build new facilities.
Recovery still uneven
The headline PMI has shown pronounced swings since early 2024. It rose from 62.1 in February 2024 to 70.1 in May before plunging to 36.9 in July.
It recovered to 65.7 in January 2025, fell to 52.9 in April and rebounded to 61.5 in July.
After remaining largely in the mid-50s through late 2025 and early 2026, it climbed to 62.8 in May before dropping to 52.9 in June.
July’s 57.8 is therefore a meaningful rebound, but not yet evidence of a sustained acceleration.
The Future Business Index showed strong expansion across all four sectors, indicating optimism about business conditions in the coming months.
M Masrur Reaz, chairman and CEO of Policy Exchange Bangladesh, said the July PMI signalled broad-based strengthening led by manufacturing, alongside continued expansion in agriculture and services.
“The manufacturing recovery coincided with the highest monthly export earnings in 12 months, while construction remained marginally in contraction despite improving conditions,” he said.
Reaz also cited improving foreign-exchange conditions and expectations of a more supportive business environment following the FY2026-27 budget.
The outlook will now be tested by whether stronger orders and confidence translate into sustained production, employment and investment.
For now, the data point to a recovery that is gaining traction but remains uneven across the economy.
