By: Staff Writer
May 19, Colombo (LNW): Sri Lanka’s industrial output showed a notable slowdown in April 2025, as reflected in the latest Purchasing Managers’ Index (PMI) for manufacturing, which fell sharply to 40.1, according to a report issued by the Central Bank of Sri Lanka (CBSL). The downturn was primarily attributed to declines across key operational components, including production, new orders, inventories, and workforce levels.
A PMI reading below 50 signifies contraction, and the April figure marks a significant dip from recent months, suggesting that manufacturers are facing renewed challenges amid a fragile economic environment. Industry analysts link the slump to post-holiday disruptions, subdued consumer demand, and caution among buyers and producers alike in the face of lingering economic uncertainty.
The CBSL noted that the slowdown was not necessarily indicative of long-term decline, as manufacturing businesses maintain a generally optimistic outlook for the next quarter. Many firms anticipate a revival in orders and a stabilisation of supply chains, particularly as the mid-year trade cycle picks up.
In contrast to the manufacturing malaise, Sri Lanka’s services sector posted robust growth in April, with the Services PMI rising to 60.6, signalling a strong expansion. Growth in services was largely driven by increased activity in financial services, retail trade, and other commercial sectors. The CBSL observed a notable uptick in new business across these areas, indicating growing consumer engagement and an easing of economic constraints in the services domain.
The retail and wholesale sectors in particular appear to have benefitted from improved mobility and consumer spending patterns. The financial sector, meanwhile, has shown signs of recovery driven by stronger credit demand and increased transactional activity.
The contrasting performances in the two sectors reflect a broader trend of uneven recovery in the Sri Lankan economy. While services have managed to rebound more quickly, manufacturing continues to grapple with persistent cost pressures, logistical bottlenecks, and weak external demand.
Looking ahead, policymakers and industry leaders will be closely monitoring inflation trends, interest rates, and export conditions, which could all influence the pace of recovery. The CBSL’s report signals that while challenges remain in the production sectors, there is cautious optimism that a turnaround may be underway, especially if broader macroeconomic indicators continue to improve.
This divergence between the manufacturing and services sectors is expected to remain a key feature of Sri Lanka’s economic landscape in the coming months, as structural reforms and external investment are sought to support a balanced recovery.
