Sri Lanka Services PMI Signals Strong Expansion

Sri Lanka’s Services PMI rose sharply to 67.9 in December 2025 from 50.5 in November, indicating a strong expansion in services sector activity. The increase was mainly driven by growth in wholesale and retail trade amid heightened festive season demand, with additional support from business-related activities, accommodation, and food and beverage services. New Businesses increased to 64.9 from 53.6, underpinned by improved activity in wholesale and retail trade, alongside strengthened performance in financial services. Employment growth moderated during the month, with the index easing to 52.6 from 55.7. Meanwhile, Backlogs of Work continued to expand for the second consecutive month, rising to 53.8 from 51.1. Looking ahead, Expectations for Business Activity over the next quarter turned optimistic, supported by improving macroeconomic conditions, seasonal tourism-related factors, and the normalization of weather-related disruptions.

Sri Lanka’s Services PMI eased to 50.5 in November 2025 from 66.0 in the previous month, marking a lowest reading since April 2023, signaling service sector activity continued to expand but at a markedly slower pace. The expansion was primarily supported by accommodation, food, and beverage services, although adverse weather conditions toward the end of the month weighed on overall activity. New businesses increased (53.6 vs 61.5 in October), underpinned by stronger demand for financial services and improved activity in wholesale and retail trade. Employment (55.7 vs 52.5) continued to expand, as firms added staff to meet seasonal operational needs. Backlogs of work (51.1 vs 47.8) reversed a three-month decline. Looking ahead, the expectations for activities over the next quarter (63.3 vs 84.2) continued to improve, albeit at a slower pace, with some respondents noting potential disruptions to consumer demand due to adverse weather conditions.

Sri Lanka’s Services PMI rose to 66 in October 2025 from 58.7, signaling strong expansion. Growth in business activity was broad-based, led by wholesale and retail trade, while financial services continued to strengthen on the back of increased lending. Expectations for business activity climbed to 84.2 from 81.1, supported by favorable macroeconomic conditions, rising tourist arrivals, and anticipated festive-season demand. New businesses rose to 61.5, though at a slower pace, with gains in trade and financial services. Employment continued to expand at 52.5, also moderating slightly, as firms adjusted staffing to operational needs. Meanwhile, backlogs of work remained in contraction at 47.8.