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Business activity and employment posted stronger growth, while new business and input costs expanded at a slower rate. However, the order backlogs index remained in contraction.

The manufacturing sector registered faster expansion, marking its second consecutive month of growth. The stronger performance was driven by robust increases in new orders, new exports, input purchases and employment.

Growth in factory output and input prices moderated. Contractions in finished goods persisted, although supplier deliveries contracted at a slower pace. Both imports and order backlogs returned to expansion.

The construction sector returned to growth after three consecutive months of contraction. New business, construction activity and employment all reverted to expansion.

Input costs expanded at a faster pace, while the growth of order backlogs slowed.

The services sector expanded for the 20th consecutive month and at a faster pace than in April. Business activity, employment and input costs all recorded stronger growth, while new business returned to expansion. However, order backlogs contracted at a faster pace.

Respondents across Bangladesh’s major economic sectors said business conditions remained challenging in May 2026 due to persistent electricity and energy shortages, rising fuel prices, increasing labour costs and higher transportation expenses.

Many firms reported that electricity disruptions continued to affect productivity and production schedules, while escalating input costs further squeezed profit margins.

Several respondents expressed concerns over the potential economic impact of ongoing geopolitical tensions in the Middle East, particularly the risk of higher fuel prices, supply-chain disruptions and weaker export demand.

Agricultural businesses highlighted weather-related uncertainties affecting seed sales and production planning. Some firms also raised concerns about imported rice, high bank interest rates and the broader slowdown in domestic economic activity.

Despite these challenges, a number of respondents remained cautiously optimistic, expecting business conditions to improve if the energy situation stabilises, economic conditions strengthen and supportive policy measures are introduced for businesses, particularly SMEs.