Construction sector enters expansion territory

Activity within Sri Lanka’s construction industry returned to growth in May, with the sector’s Purchasing Managers’ Index rising to 59.1 from 45.7 in April.

This rebound followed a seasonal lull during the festive period and indicates that investment remains firm despite challenges such as increased borrowing costs and global economic pressures.

New projects drove much of this momentum, as the New Orders Index reached 63.6.

Firms also increased hiring, pushing the Employment Index to 56.1, while demand for construction materials saw a sharp rise.

These figures suggest a stable project pipeline spanning infrastructure, tourism, and real estate.

Despite this recovery, contractors face ongoing difficulties.

A persistent shortage of skilled labour continues to hamper operations, and elevated material prices remain a burden.

Respondents also noted supply issues regarding specific inputs like bitumen.

Nevertheless, business outlooks stay optimistic, with firms anticipating steady project flow and hoping for a reduction in regional geopolitical tensions over the coming three months.