Wednesday, July 24, 2024

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Construction sector sees improvement with the resumption of stalled projects

By: Staff Writer

July 01, Colombo (LNW): The Sri Lanka construction industry accounting for 7.1 percent of the GDP is now poised for recovery from the set back due to economic crisis.

The Government’s decision to continue investing in the development of national road network, completion of expressways, construction of bridges and flyovers, development of urban and rural housing, establishment of 1,000 national schools and rehabilitation of small tanks.

At the same time,the present administration has been able  to promote  foreign funded-projects (eg. by JICA, World Bank, ADB, etc.) to fill that gap.

Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction) recorded an index value of 54.5 in May 2024, indicating an improvement in construction activities, Central Bank announced.

Index compiler Central Bank said many construction projects were back on course in May after the extended holidays of the previous month. However, several respondents mentioned that the prevailed adverse weather conditions had dampened the expected improvement.

New Orders marginally increased in May compared to the previous month. As per the survey participants, road construction projects are the mostly available large-scale tenders at present. Many of them emphasised the necessity of more sizable infrastructure projects to stimulate the construction industry.

Employment continued to contract, yet at a slower pace in May, as the firms are still cautious in hiring. Further, Quantity of Purchases remained at the same level as in the previous month.

CBSL said many respondents mentioned that the price levels of construction-related materials continued to decline during the month, which is conducive to the industry.

Suppliers’ Delivery Time remained lengthened in May as well.“The outlook for construction activities over the next three months remains positive, mainly due to the expected increase in project availability,” CBSL added.

Many firms attributed the growth in construction activities to the current conducive environment and the resumption of several temporarily suspended projects.

New Orders continued to increase for the second consecutive month, reflecting the improved demand conditions in the industry. The respondents mentioned that large-scale infrastructure projects, particularly foreign-funded ones, are also among the available tender opportunities. However, Employment remained contracted in February, yet at a slower rate than the previous month. Several survey respondents cautioned about the shortage of skilled and experienced construction workers.

Further, Quantity of Purchases improved due to the increased pipeline projects. The price levels of construction materials denoted a downward adjustment during the month. Meanwhile, Suppliers’ Delivery Time further lengthened in February.Most of the firms are optimistic on the next three months mainly because of the increased availability of projects.

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