Colombo, Sri Lanka – 15 September 2026 – Sri Lanka’s economic landscape demonstrated continued expansion in August 2026, with both the Manufacturing and Services sectors registering growth, according to the latest Purchasing Managers’ Index (PMI) report released by the Central Bank of Sri Lanka (CBSL). While manufacturing activities expanded at a slightly slower pace, the services sector witnessed a significant acceleration in its growth trajectory.
Manufacturing Sector: Sustained Growth with Moderation
The Purchasing Managers’ Index for Manufacturing (PMI – Manufacturing) recorded an index value of 53.0 in August 2026. This figure signifies an expansion in manufacturing activities for the month, though at a moderated rate compared to July. An index value above 50 indicates expansion, while below 50 suggests contraction.
A closer look at the sub-indices reveals nuanced trends:
- The New Orders sub-index remained at the neutral threshold (50.0), indicating broadly unchanged levels of new business activities.
- Production moderated to 48.4, falling below the neutral threshold, primarily driven by a slowdown in the manufacture of textiles and wearing apparel sector.
- Both Employment (54.8) and Quantity of Purchases (54.8) sub-indices saw increases, reflecting continued hiring and a gradual build-up of inventories, likely in anticipation of year-end seasonal production.
- Suppliers’ Delivery Times lengthened further to 63.0, indicating persistent supply disruptions within the sector.
Despite the slight moderation, the outlook for manufacturing remains positive, primarily buoyed by the expected year-end seasonal upturn, though near-term challenges are acknowledged.
Services Sector: Accelerated Expansion Driven by Key Sub-sectors
The Services sector showed robust performance, with the Purchasing Managers’ Index for Services (PMI – Services) registering a strong 65.6 in August 2026. This marks an accelerated expansion in services activities compared to the previous month, underscoring significant dynamism in this segment of the economy.
Key drivers behind this impressive growth include:
- Business Activity grew at a faster pace, supported by broad-based improvements across many sectors. This was predominantly fueled by strong performances in transportation, wholesale and retail trade, and professional services sub-sectors. Financial and other personal services also contributed positively.
- New Businesses increased, largely due to expansions in wholesale and retail trade, financial services, professional services, and other personal services sub-sectors.
- Employment continued to increase, supported by new recruitments.
- Backlogs of Work declined in August, reversing the increase observed in July.
Expectations for business activity in the upcoming quarter remain positive, driven by anticipated broader economic improvements and expected growth in tourist arrivals. However, global economic uncertainties continue to pose potential downside risks to this optimistic outlook.
Global Context
The CBSL report also provides a brief comparative global outlook. In manufacturing, while the global index saw a rising, higher rate, India experienced a rising, slower rate, and the UK saw a similar trend. In services, countries like India, China, and the US all reported rising, higher rates, indicating a generally positive global environment for the services sector.
The Purchasing Managers’ Index (PMI) serves as a vital economic indicator, providing insights into the health of the manufacturing and services sectors by tracking variables such as new orders, output, employment, and supplier delivery times. An index value above 50 indicates an expansion, while below 50 suggests a contraction. The latest figures for August 2026 suggest a resilient Sri Lankan economy, navigating both domestic and global challenges with continued growth.
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