Sri Lanka Services PMI Falls to Near Three-Year Low

Sri Lanka’s Services PMI fell to 46.7 in April 2026 from 59.4 in the previous month, marking the lowest level since July 2022 and signaling a contraction in services activity. The decline was mainly linked to seasonal effects following the festive period and higher energy prices. New business fell for the first time since April 2023, dropping to 48.9 from 57.6, with weaker activity reported in transportation of goods, insurance, wholesale and retail trade, and accommodation and food services. Employment also contracted, falling to 44.4 from 54.2 due to contract expirations, retirements, and resignations. Meanwhile, backlogs of work continued to decline, though at a slower pace, with the index edging up to 48.8 from 48.1. Despite the weaker current conditions, expectations for business activity over the next quarter improved to 65.9, supported by anticipated stabilization following an end to the Middle East war.

Sri Lanka’s Services PMI rose to 59.4 in March 2026 from 54.4 in February, signaling continued expansion in activity. Growth was broad-based, led by financial services amid increased lending, while wholesale and retail trade benefited from festive demand. Professional and other personal services also posted notable gains. New business expanded further (57.6 vs 53.8 in February), driven mainly by financial services, alongside strong growth in insurance and pension funding. Employment edged lower (54.2 vs 55.1), although firms increased hiring to accommodate stronger consumer demand ahead of the festive season, while the pace of decline in backlogs of work moderated (48.1 vs 47.6). Looking ahead, expectations for business activity over the next quarter continued to rise, albeit at a softer pace (57.1 vs 65.9), supported by seasonal demand and potential new opportunities, although some firms flagged downside risks from the Middle East conflict and broader global economic uncertainty.

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.