Construction PMI exceeds neutral threshold after two years

Sri Lanka Purchasing Managers’ Index for Construction (PMI – Construction) indicates an expansion in construction activities in January 2024, as reflected by the Total Activity Index, which recorded an index value of 52.9. 

Central Bank said this marks the first time that the index exceeded the neutral threshold since January 2022. 

Many respondents mentioned that new construction work is gradually becoming available, while some suspended projects also recommenced on a limited scale during the month.

New orders increased in January compared to the previous month. Most of the respondents mentioned that, at the moment, the availability of both foreign-funded projects and privately-funded local projects is higher.

However, employment continued to contract, yet at a slower rate in January. 

Meanwhile, quantity of purchases rebounded during the month in line with the increases in total activity and new orders. Nevertheless, increases in material prices were widely highlighted, mainly due to the impact of the amendments made to the Value Added Tax. 

Suppliers’ delivery time remained lengthened during the month.

The industry outlook for the next three months is positive, mainly due to the increased project opportunities