By: Staff Writer
June 18, Colombo (LNW): Sri Lanka’s services sector recorded a strong resurgence in May, with business activity expanding at a faster pace as financial services, professional activities, and transportation industries drove a broad-based recovery.
Fresh data from the Central Bank of Sri Lanka’s Purchasing Managers’ Index (PMI) survey showed the Services PMI rising to 56.9 in May from 46.7 in April. The increase signals a return to expansion after activity slowed during the previous month, reflecting renewed business confidence across several key sectors of the economy.
A closer review of the figures reveals that new business generation was a major contributor to the sector’s improved performance. The New Businesses Index climbed to 58.0 from 48.9 in April, indicating stronger demand for services and a pickup in commercial activity.
The financial and professional services industries emerged as the primary growth engines. These sectors benefited from increasing customer engagement and improved market conditions. Additional support came from wholesale and retail trade, goods transportation, and other personal services, all of which reported stronger activity levels during the month.
The rebound was not limited to traditional sectors. Real estate services and information technology programming also registered notable growth, highlighting a broader recovery that extends beyond finance and trade. Analysts suggest that increasing economic stability and improving business sentiment may be encouraging companies and consumers to spend more on specialized services.
However beneath the positive headline figures, challenges remain. Employment within the services sector declined during May, raising questions about the sustainability of the recovery. Survey respondents cited contract expirations, retirements, and employee resignations as the main reasons for the reduction in workforce numbers.
At the same time, backlogs of work continued to decrease, and at a faster pace than in April. While a reduction in outstanding work can indicate improved efficiency, it may also suggest that some businesses are managing lower workloads with fewer employees.
Business expectations for the next three months remain firmly positive. Much of that optimism is linked to anticipated increases in tourist arrivals during the upcoming Perahera season, traditionally one of the country’s busiest tourism periods. Industry stakeholders believe stronger visitor numbers could provide a substantial boost to hospitality, transportation, retail, and related services.
Improved domestic economic conditions are also helping to support confidence among businesses. However, executives participating in the survey warned that international uncertainties continue to pose significant risks. Ongoing geopolitical tensions, volatile global markets, and shifting economic conditions abroad could affect demand and investment flows.
The May PMI results suggest Sri Lanka’s services sector is regaining momentum after a temporary setback. While growth has returned and business expectations remain upbeat, the sector’s ability to maintain its upward trajectory will depend on balancing local opportunities against an increasingly uncertain global environment.