• In April 2024, the country’s manufacturing sector, as per the Purchasing Managers Index (PMI), failed to sustain the strong upturn recorded in the first quarter, recording an index value of 42.0 which indicates a contraction in manufacturing activities, while the services sector showed a sluggish expansion.
• The Central Bank of Sri Lanka, compiler of the PMI, reported that new orders, production, employment, and stock of purchases sub-indices declined in April, leading to an overall decrease in the index. Respondents attributed the decline in new orders to the conclusion of the festive season's demand, notably for food and beverages. Additionally, the reduction in production was primarily attributed to fewer working days due to the temporary closure of most factories for the Sinhala and Tamil New Year holidays.

In April 2024, the country’s manufacturing sector failed to sustain the strong upturn recorded in the first quarter, with the Manufacturing PMI dropping to an index value of 42.0, indicating a contraction in manufacturing activities. This followed a positive turn in the first three months, peaking at 62.5 in March 2024 after a dip in December 2023. The Central Bank of Sri Lanka (CBSL) attributed this decline to a reduction in new orders, production, employment, and stock of purchases. The drop in new orders was largely due to the end of festive season demand, especially for food and beverages, and the decrease in production was influenced by fewer working days in April due to the Sinhala and Tamil New Year holidays. Consequently, employment and stock of purchases also declined, while suppliers’ delivery time lengthened due to the extended holidays. Despite these challenges, industry expectations for manufacturing activities in the next three months remain positive, anticipating a gradual increase in demand.

Conversely, the services sector showed a sluggish expansion in April 2024, with the Services PMI recording an index value of 56.7. This expansion was driven by improvements in several sub-sectors, notably financial services, which benefited from a reduction in policy rates in March 2024, and the wholesale and retail trade sub-sector, which saw considerable growth amid seasonal demand. Additionally, programming and broadcasting, telecommunication, and real estate sub-sectors recorded positive developments. However, the accommodation, food, and beverage sub-sector declined slightly due to a drop in tourist arrivals on a month-on-month basis. While new businesses increased, particularly in wholesale and retail trade, financial services, and real estate, employment declined despite some new recruitments, and backlogs of work continued to decrease. Expectations for business activities over the next three months remain positive but are rising at a slower rate, supported by favorable macroeconomic conditions.

Downturn for manufacturing in April, service sector posts marginal expansion | Daily FT