Sri Lanka Manufacturing Activity Rebounds in May

Sri Lanka’s Manufacturing PMI rose to 56.6 in May 2026 from 42.6 in the previous month, signaling a rebound in manufacturing activity. All sub-indices moved above the neutral threshold. Stocks of purchases increased to 52.6 from 44.0, in line with gains in new orders (52.6 vs 36.4) and production (54.6 vs 30.5). The rise in new orders and output was mainly driven by the food and beverages and textiles and wearing apparel sectors. Production also benefited from a higher number of working days in May compared to April. Meanwhile, suppliers' delivery times remained lengthened, though the index eased to 66.3 from 68.7. Respondents continued to cite the Middle East conflict as a source of operating challenges.

Sri Lanka’s Manufacturing PMI dropped sharply to 42.6 in April 2026 from 66.7 in March, marking the lowest reading in one year and signaling a contraction in manufacturing activity. The decline was mainly driven by a sharp slowdown in new orders, which fell to 36.4 from 69.9, amid fading festive demand in the food, beverage, textile, and apparel sectors. Production also contracted significantly, dropping to 30.5 from 68.8, largely due to fewer working days during the Sinhala and Tamil New Year period, when many factories temporarily closed. Employment weakened to 47 from 55.9 as firms reduced temporary staff following seasonal demand. The stock of purchases index also declined to 44 from 59.9, in line with lower production and orders. Meanwhile, suppliers’ delivery times lengthened further, with the index at 68.7, reflecting festive disruptions and logistical challenges linked to the Middle East conflict.

Sri Lanka’s Manufacturing PMI climbed to 66.7 in March 2026 from 56.8 in the previous month, hitting its highest level since June 2020. This signals strong expansion driven by seasonal demand, although firms continued to face tight production conditions due to shortages of raw materials and fuel, rising costs, and logistical constraints. New orders (69.9 vs 55 in February) and production (68.8 vs 54.5) expanded, particularly in food & beverages and textiles & wearing apparel. The stock of purchases also grew, albeit at a softer pace (59.9 vs 60), with some firms building precautionary inventories amid risks linked to the Middle East conflict. Employment growth slowed (55.9 vs 58.6), while suppliers’ delivery times lengthened further (75.5 vs 59.6) due to strong demand and shipping disruptions. Looking ahead, manufacturers remained optimistic for the next quarter, although expectations were tempered by uncertainties surrounding the Middle East conflict.