Tourism, Trade and Transport Drive Sharp Rise in Sri Lanka’s Services Sector

COLOMBO (News 1st); Sri Lanka's business activity continued to expand in August 2026, with both the manufacturing and services sectors recording growth, according to the latest Purchasing Managers' Index (PMI) released by the Central Bank of Sri Lanka.

The data showed particularly strong momentum in the services sector, which accelerated at a faster pace compared to the previous month.

The PMI for Manufacturing recorded 53.0 in August 2026, signalling a continued expansion in manufacturing activities, although at a slower pace than the 55.0 recorded in July.

The Central Bank noted that all major manufacturing sub-indices remained above the neutral threshold except for production. New Orders remained at the neutral level of 50.0, indicating broadly unchanged business activity, while production declined to 48.4, largely due to moderation in the textiles and apparel sector.  Employment rose to 54.8 from 51.0, reflecting continued recruitment, while stock of purchases also increased to 54.8 as manufacturers prepared for year-end seasonal demand. Suppliers’ delivery times lengthened further to 63.0, highlighting ongoing supply disruptions.

Despite these short-term challenges, the outlook for manufacturing remains positive, supported by expected year-end seasonal demand and continued business expansion.

Meanwhile, Sri Lanka's services sector delivered a stronger performance, with the PMI Services Business Activity Index rising to 65.6 in August from 61.4 in July, signaling a faster rate of expansion. The growth was driven primarily by strong performances in the transportation, wholesale and retail trade, and professional services sectors, while financial services and other personal services also made notable contributions.

New business activity remained strong, recording a reading of 60.0, supported by growth in wholesale and retail trade, financial services and personal services. Employment also expanded further to 53.3, reflecting ongoing recruitment across the sector. Backlogs of work, however, declined to 48.3, reversing the increase recorded in the previous month.

Businesses also remained optimistic about the coming months. Expectations for future activity stood at 71.7, with respondents citing anticipated economic improvements and rising tourist arrivals as key factors supporting growth. However, the Central Bank cautioned that broader global economic uncertainties continue to pose downside risks to the outlook.

The report also showed that global business conditions remained generally positive. Manufacturing activity continued to expand across major economies including China, the United States, India, the United Kingdom and the Eurozone, while services sector activity also recorded growth across most leading global markets.