Sri Lanka’s manufacturing and services sectors showed strong performance in December 2024, with both industries benefiting from seasonal and economic factors.
According to the Central Bank of Sri Lanka, the Purchasing Managers’ Index (PMI) for Manufacturing reached a value of 57.2 in December, reflecting a steady expansion in manufacturing activities.
The PMI for Services also showed impressive growth, with the Business Activity Index hitting 71.1.
This growth highlights a positive outlook for the country’s economic performance, driven by a combination of festive season demand, tourism growth, and increased economic activity.
In the manufacturing sector, the PMI continued to reflect expansion, with all sub-indices, except Employment, contributing positively to the overall index.
The New Orders and Production sub-indices saw a notable increase, fueled by a surge in orders, especially in the food and beverage manufacturing sectors, which performed strongly during the festive season.
However, the textiles and apparel sector faced a slowdown in production due to a drop in orders from key export markets, particularly during the winter holiday period.
This reduction in demand led to a decrease in the use of casual labor in the sector, which contributed to a decline in the Employment sub-index.
Despite these challenges in certain subsectors, the Stock of Purchases sub-index continued to grow, indicating that manufacturers were preparing for continued demand in the coming months.
The Suppliers’ Delivery Time sub-index remained elongated, reflecting ongoing supply chain challenges, though expectations for manufacturing activities in the next three months point to a more positive outlook, driven by better economic conditions and an anticipated recovery in global demand.
On the services side, the PMI for Services showed a remarkable increase, with the Business Activity Index reaching a robust 71.1. This significant growth was underpinned by an uptick in business activities across various sectors.
The wholesale and retail trade sector saw strong growth, fueled by increased consumer spending during the festive period and the peak of the tourist season.
This surge in retail activity was complemented by a notable rise in business activity within the financial services sector, where lending activities increased significantly, contributing to the overall growth in services.
Other personal services, including leisure and hospitality services, also benefited from higher demand during the holiday season.
The increase in tourist arrivals helped support the growth in this area, as businesses in the leisure sector ramped up to accommodate the influx of international visitors.
Furthermore, the services sector saw an increase in new businesses, particularly in financial services and retail trade, which were able to expand due to growing demand and the improving economic environment.
Employment in the services sector also saw an upward trend, driven by the need to accommodate the expanding economic activities. Recruitments were made to handle the increased workload across various services, from retail and hospitality to financial services.
However, there was an increase in Backlogs of Work, indicating that businesses faced some operational challenges in managing the increased demand.
Looking forward, both the manufacturing and services sectors are expected to continue their positive trajectory. The Central Bank has projected a favorable economic outlook, supported by the anticipated recovery in global markets and further growth in tourism and trade.
Manufacturers are preparing for stronger demand, particularly in the food and beverage sector, while the services sector is expected to benefit from continued growth in retail, financial services, and leisure industries.
Overall, Sri Lanka’s manufacturing and services industries are positioned for continued growth in 2025, bolstered by a combination of domestic demand, global economic recovery, and the country’s strategic focus on enhancing its tourism and export sectors.
