Sri Lanka's construction sector has marked a notable turnaround, with activity surpassing the neutral threshold for the first time since January 2022, according to the latest report from the Central Bank.
The Purchasing Managers' Index (PMI) for construction in January 2024 climbed to 52.9, signaling an expansion in activities within a sector that has faced prolonged challenges. PMI values above 50 indicate expansion, while those below 50 indicate contraction.
The Central Bank attributed the upswing to the gradual availability of new construction projects and the resumption of some previously suspended projects on a limited scale during the month.
Although employment within the sector continued to decline, albeit at a slower pace, January witnessed an increase in new orders compared to the previous month. Respondents noted a rise in both foreign-funded projects and privately-funded local projects, contributing to the overall uptick in activity.
However, challenges persist, notably the contraction in employment and the lengthening of suppliers' delivery times, reflecting ongoing strains within the industry. Material prices surged, largely influenced by amendments to the Value Added Tax, posing additional hurdles for construction firms.
Despite these challenges, the industry outlook for the next three months appears positive, buoyed by increased project opportunities, according to the Central Bank's assessment.
