Economic activity remained in contraction for a second consecutive month in September, with the purchasing managers’ index (PMI) falling 1.3 points to a two-year low of 48.6.
The leading indicator of sectoral activities showed manufacturing weakening to its lowest level since July 2024, construction returning to contraction and services remaining marginally below the expansion threshold, while agriculture expanded for a 13th straight month.
According to index providers Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and Policy Exchange Bangladesh (PEB), a PMI reading above 50 indicates expansion while one below 50 signals contraction.
The composite PMI was the lowest after August 2024, when it stood at 43.5, and has fallen 9.2 points from July’s 57.8 after a 22-month expansion streak through July 2026.
Manufacturing remained the weakest sector, dropping 2.6 points to 44.8 from 47.4 in August, its lowest since the index plunged to 34.1 in July 2024.
New orders, export orders, output, stocks of input purchases and finished goods, and imports contracted at faster rates. Employment returned to marginal expansion, input prices kept rising, order backlogs contracted strongly and supplier delivery times expanded at a slower pace, MCCI and PEB said on Thursday.
The reversal has been sharp. Manufacturing jumped 16.6 points to 65.4 in July, when all major indicators except order backlogs were expanding, before losing 18 points in August and another 2.6 points in September – a two-month fall of 20.6 points.
Analysts and entrepreneurs said the energy crisis might have weighed on manufacturing over the past two months.
Construction fell 3.8 points to 48.5 from 52.3, returning to contraction after one month of expansion. New business and activity declined, employment was unchanged, input costs remained strongly in expansion at a slightly slower pace and order backlogs returned to growth.
Services slipped 0.2 points to 49.0 from 49.2, marking a second straight month of marginal contraction and its weakest reading after August 2024.
New business and business activity in the service sector returned to contraction, employment declined at a slower pace, input costs continued to rise strongly and order backlogs remained in contraction. Services had stood at 56.0 in July, completing a 22-month expansion run.
Agriculture was the only sector still expanding, though its PMI fell 1.3 points to 55.2.
The sector recorded its 13th consecutive month of expansion, with new business, activity and employment still growing at slower rates. Input costs remained in strong expansion despite easing slightly, while order backlogs contracted more slowly.
Business sentiment in September remained cautious and mixed. Some respondents expected improvement on confirmed orders, reliable buyers and stronger seasonal demand during the approaching winter and peak business season.
Others cited repeated fuel and oil price increases, rising input and operating costs, weak consumer purchasing power, electricity and gas shortages and limited bank financing.
Several said economic uncertainty was making planning difficult and warned of further deterioration if fuel and other cost pressures persisted.
Respondents said stronger domestic demand, reliable energy supply, better access to finance and lower cost pressures would be critical to business confidence.
Despite the current weakness, the Future Business Index remained in expansion across all four sectors, signalling a cautious optimism.
PEB Chairman and CEO M Masrur Reaz said September’s PMI showed economic dynamism remained under pressure as weakness in manufacturing, construction and services outweighed resilience in agriculture.
“Strengthening domestic and export demand, ensuring reliable energy supply, easing financing constraints and containing cost pressures will be important to restore momentum,” Reaz said.
The Bangladesh PMI is developed with UK government support and technical assistance from the Singapore Institute of Purchasing & Materials Management.
