Sri Lanka’s economy demonstrated continued recovery in November, bolstered by both manufacturing and services sector growth. The expansion was driven by increased demand during the year-end festive season, improved consumer sentiment, and lower interest rates, central bank announced
The Purchasing Managers’ Index (PMI), a key economic indicator of the Central Bank , reflected this positive momentum. The manufacturing PMI recorded a value of 53.3, signaling continued expansion, though slightly moderated from October’s 58.1. Meanwhile, the services sector PMI rose to 60.5 from 60.3, showing steady improvement. PMI readings above 50.0 denote expansion, while values below signal contraction.
In manufacturing, textiles and apparel emerged as a strong performer, driven by increased export orders, particularly from Western markets, where economic resilience has maintained consumer and retail spending. The production sub-index also expanded, primarily due to growth in the food and beverage sector. Concurrently, employment levels and stock purchases increased in response to higher production and new orders.
Despite these gains, some concerns were noted, particularly in food manufacturing, where raw material shortages remain a challenge. Nevertheless, overall sentiment among manufacturers remains optimistic for the next three months.
On the services front, activity was buoyed by increased tourist arrivals, boosting accommodation, food, and beverage sectors. Lending activities in the financial services sector surged as interest rates declined, leading to a rise in loan demand. The wholesale and retail trade sectors also saw significant improvement ahead of the festive season, although adverse weather conditions partially dampened sales.
Employment within the services sector increased to meet growing demand, particularly in tourism and seasonal retail activities. Notably, backlogs of work declined, reflecting improved operational efficiency.
The Central Bank of Sri Lanka (CBSL), the compiler of the PMI, highlighted the broad-based improvements across industries. The bank noted that the rise in new businesses was particularly driven by expansions in financial services and hospitality sectors. Furthermore, expectations for the next three months remain positive, fueled by continued tourist inflows and festive season demand.
Sri Lanka’s economy continued its upward trajectory in November. The combined strength of the manufacturing and services sectors, supported by favorable conditions such as lower inflation and interest rates, signals sustained recovery and growth. Both sectors are poised for further improvement, driven by year-end seasonal momentum and positive outlooks for the months ahead.
