Colombo, 31 August 2026 – Sri Lanka’s construction sector demonstrated accelerated growth in July 2026, with the Purchasing Managers’ Index (PMI) for Construction reaching 61.4. This marks a continued and strengthened expansion in construction activities, according to the latest figures released by the Central Bank of Sri Lanka (CBSL) Statistics Department.
The Total Activity Index, which serves as the headline PMI for Construction, rose from 60.0 in June to 61.4 in July. An index value above 50 signifies an expansion in the sector on a month-on-month basis, indicating a robust upward trend despite several prevailing operational hurdles.
Drivers of Sustained Growth
The July 2026 report highlights a sustained flow of construction work, which has been instrumental in driving the sector’s positive trajectory. Key components contributing to this expansion include:
- New Orders: The New Orders Index saw a significant increase from 54.3 in June to 57.1 in July. This improvement is attributed to a steady inflow of new projects, signaling continued demand and investment in the construction landscape.
- Quantity of Purchases: Reflecting the increased workload, the Quantity of Purchases Index also rose substantially from 60.0 in June to 64.7 in July. This indicates heightened procurement of raw materials and inputs to meet project demands.
- Employment: The Employment Index strengthened marginally, moving from 61.4 to 61.8. While this suggests an increase in overall employment within the sector, it also underscores the ongoing efforts by firms to staff projects amidst a challenging labour market.
Persistent Headwinds and Constraints
Despite the strong overall expansion, the construction sector continues to grapple with significant input constraints and operational challenges:
- Bitumen Shortage: Many survey respondents specifically highlighted a short supply of bitumen, a critical material for infrastructure projects, impacting the smooth execution of work.
- Skilled Labour Shortages: While employment levels rose, firms persistently reported a scarcity of skilled labour, posing a bottleneck for project completion and efficiency.
- Supply Shortages and Elevated Prices: Survey participants continued to report widespread supply shortages for various materials and elevated material prices, adding to project costs and timelines.
- Suppliers’ Delivery Time: The Suppliers’ Delivery Time Index, although decreasing slightly from 62.9 in June to 60.0 in July, remained high. An index above 50 indicates lengthening delivery times, implying that suppliers are still taking longer to deliver goods, albeit at a slightly slower rate of lengthening.
Outlook Remains Positive Amidst Input Concerns
Looking ahead, expectations for construction activities over the next three months remain broadly positive. Optimism is largely fueled by the anticipation of upcoming project awards, suggesting a healthy pipeline of work for the sector.
However, concerns persist among industry players regarding the ability to maintain a steady flow of inputs. Addressing these supply chain and material availability issues will be crucial for the sustained momentum of the construction sector in the coming months.
Global Context
In contrast to Sri Lanka’s expanding construction sector, the global outlook for construction in July 2026, as compiled by S&P Global, presented a mixed picture. Territories like the Eurozone, France, Germany, and the UK reported falling activity, some at a slower rate and others at a higher rate of contraction. Ireland showed a rise from a previous fall, while Italy experienced falling activity at a slower rate, highlighting the unique resilience and growth trajectory of Sri Lanka’s construction industry.
The Purchasing Managers’ Index (PMI) is a diffusion index, calculated on a scale of 0 to 100. A PMI reading above 50 indicates an expansion, while a reading below 50 indicates a contraction. A reading of 50 suggests no change from the previous month. The survey targets highest graded local construction companies registered with the Construction Industry Development Authority.
Source: Read original document from the Central Bank of Sri Lanka
