Bangladesh’s private sector activity expanded at its fastest pace in 15 months in May, driven by stronger manufacturing and services activity and a rebound in construction ahead of Eid, signalling broad-based improvement across the economy despite persistent energy shortages, rising costs and geopolitical uncertainties.
The Bangladesh Purchasing Managers’ Index (PMI) rose 8.2 points to 62.8 in May from 54.6 in April, according to the latest survey released jointly by the Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Exchange Bangladesh (PEB) on Monday.
The reading was the highest since February 2025, when the PMI stood at 64.6.
On a 0-100 scale, a PMI reading above 50 indicates expansion in business activity, while a reading below 50 signals contraction.
The sharp increase in May was driven primarily by stronger growth in manufacturing and services, while the construction sector returned to expansion after three consecutive months of contraction. Agriculture also remained in expansion territory for a ninth straight month, although growth slowed marginally.
“The May PMI shows that Bangladesh economy moved onto a stronger expansionary path, with manufacturing, construction and services recording faster growth compared with April,” PEB Chairman and CEO M Masrur Reaz said.
“Although the Middle East conflict has continued to raise energy costs, disrupt supply chains and sustain inflationary pressures, stronger domestic demand and increased business activity ahead of Eid appear to have supported broader-based expansion across major sectors,” he said.
Manufacturing was among the strongest-performing sectors, with its PMI rising to 64.1 in May from 56.9 in April.
The sector recorded its second consecutive month of expansion, supported by stronger growth in new orders, export orders, input purchases and employment. Imports and order backlogs also returned to expansion.
However, growth in factory output and input prices slowed, while contractions persisted in finished goods inventories. Manufacturing was also the only major sector where the future business index recorded a contraction.
Construction posted a notable turnaround, with its PMI rising to 52.9 from 44.6 a month earlier.
The sector returned to expansion as new business, construction activity and employment all rebounded after three months of contraction. Input costs, however, increased at a faster pace, indicating continued cost pressures.
Services expanded for a 20th consecutive month, with the index climbing to 62.3 from 51.8 in April.
Business activity, employment and new business all grew at a faster pace, although order backlogs contracted more rapidly.
Agriculture remained the strongest-performing sector in absolute terms, posting a PMI reading of 70.0, slightly lower than April’s 70.7.
The sector recorded stronger growth in business activity and employment, while new business and input costs expanded more slowly. Order backlogs contracted, although the future business index continued to signal expansion.
Despite the stronger headline reading, businesses across sectors reported challenging operating conditions.
Respondents cited persistent electricity and energy shortages, rising fuel prices, higher labour costs and increased transportation expenses as major obstacles. Many firms said power disruptions continued to affect production schedules and productivity, while higher input costs squeezed profit margins.
Businesses also expressed concern over the economic implications of continuing tensions in the Middle East, particularly the risk of higher fuel prices, supply chain disruptions and weaker export demand.
Agricultural enterprises highlighted weather-related uncertainties affecting production planning and seed sales. Some firms also cited imported rice, high bank lending rates and weak domestic economic activity as concerns.
Even so, many businesses remained cautiously optimistic, expecting conditions to improve if energy supplies stabilise, economic activity strengthens and supportive policy measures are introduced, particularly for small and medium-sized enterprises.
The PMI, launched in 2024, is based on monthly surveys of more than 500 private-sector enterprises and serves as a forward-looking indicator of economic activity.
It is developed by MCCI and PEB with technical support from the Singapore Institute of Purchasing & Materials Management and funding from UK International Development.
