Sri Lanka Services PMI Slows in February

Sri Lanka’s Services PMI eased to 54.4 in February 2026 from 64.5 in January, signaling slower expansion. All sub-indexes rose at a slower pace except Backlogs of Work, which contracted. Growth was broad based, led by professional and personal services, with accommodation, food, and education sectors maintaining momentum. New Business (53.8 vs 60.8) expanded on rising demand for hospitality and personal services. Employment (55.1 vs 59.2) rose as firms hired to meet consumer demand. Backlogs of Work (47.6 vs 48.9) declined faster. Business Activity expectations (65.9 vs 76.9) remained strong, supported by seasonal demand and planned expansions. Still, some firms warned of risks from Middle East conflict and global uncertainty.

Sri Lanka’s Services PMI eased to 64.5 in January 2026 from 67.9 in December, indicating a softer expansion in the services sector. The moderation reflected a slight easing of demand after the post-holiday peak. Still, strength remained in wholesale and retail trade, accommodation, food and beverage services, and financial services, supported by increased lending activity. New businesses fell to 60.8 from 64.6, led by financial services, education, and transportation, though growth was more cautious than in December. Meanwhile, employment rose to 59.2 from 52.6, as firms maintained workforce expansion to meet demand. Backlogs of work declined to 48.9 from 53.8, reflecting improved efficiency and a temporary easing of pressures. Expectations for activity over the next quarter stayed positive, supported by favorable macroeconomic conditions, seasonal demand, and continued normalization after weather-related disruptions.

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.