PMI launched to gauge BD’s economic health

Purchasing managers' index (PMI) has been launched for Bangladesh with intent to gauge economic health of the country and help businesses take informed decisions.

The Metropolitan Chamber of Commerce and Industry, Dhaka in partnership with the Policy Exchange of Bangladesh made the initiative supported by the UK Government's Foreign, Commonwealth and Development Office.

The index was officially launched at MCCI's Gulshan office on Monday.

PMI is a leading economic indicator, which helps understand the economic health of a country, as it provides insights into key economic sectors and captures early trends.

The PMI data index is compiled from monthly surveys of private sector enterprises.

In his welcome remarks, MCCI president Kamran T Rahman said the PMI data set had wide-ranging applications and could be used by various stakeholders.

"It (PMI) has already been implemented in several nations," he said, adding that the country would be greatly benefited from the index.

Mr Rahman believed PMI could play a key role in sustaining Bangladesh's development trajectory.

PEB chairman Dr M Masrur Reaz said the MCCI, the PEB and the FCDO came together to make robust data available regularly throughout the year.

"As PMI provides actionable and quantifiable insights about the economy," he said, "it was very useful for the stakeholders."

Dr Reaz believes it will help stakeholders make business and policy decisions.

"Quantifiable data is much better actionable and reliable than those of narrative data."

PEB senior manager (market and policy advisory) Mr Hasnat Alam gave a brief presentation on the fundamentals and practicality of the PMI programme.

During the open forum, the topics that came up for discussion included correlation between different variables used in PMI surveys, data reliability, confidentiality and interpretation challenges.

Acting British High Commissioner and Development Director to Bangladesh Matt Cannell as the guest of honour acknowledged that as Bangladesh underwent LDC graduation, it must prepare for possible forthcoming challenges.

"By leveraging real-time data and insights from the PMI, Bangladesh will be able to tackle future challenges effectively," he said.

Mr Cannell, however, spoke about the UK's continued support for Bangladesh's development pursuits.

According to him, real-time data is very important for informed business choices.

PMI data will be sourced from monthly surveys conducted on more than 500 private enterprises across key economic sectors, including agriculture, construction, manufacturing and services.

However, Dr Reaz said they would publish quarterly index primarily and monthly index gradually.

Both developed and developing economies widely use PMI as it provides early insights into shifts in the business cycle and facilitates close monitoring of changes in significant economic indicators such as GDP and inflation.

In essence, PMI offers a concise assessment of whether market conditions are expanding, remaining stable or contracting as perceived by purchasing managers.

The index is measured on a scale of 0 to 100 where a PMI exceeding 50 signifies expansion compared to the previous month, while a reading below 50 indicates contraction.

A PMI of 50 implies no month-on-month change in the selected market.

The surveys will focus on five equally weighted areas: the volume of new orders, inventory levels, production, supplier deliveries and employment.

As a result, PMI datasets are valuable for government policymakers, financial institutions, corporations, investors, traders and analysts.

MCCI secretary-general and CEO Farooq Ahmed moderated the event that ended with a vote of thanks from MCCI.

Representatives from MCCI members, the business community, think tanks and the media were present.

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