Sri Lanka Services Growth Hits Highest Since December

Sri Lanka’s Services PMI rose to 65.6 in August 2026 from 61.4 in July, marking the highest level since December of 2025 and expanding for a fourth consecutive month. Growth was supported by stronger performance across sectors, primarily in transportation, wholesale and retail trade, and professional services. This was also reflected in assessments of new business, which increased, albeit at a slightly slower pace than in the previous month. Employment rose, supported by new recruitment, while backlogs of work declined. Looking ahead, firms remained optimistic, supported by expectations of higher tourist arrivals. However, sentiment weakened as broader economic uncertainty continued to pose downside risks.

Sri Lanka’s Services PMI rose to 61.4 in July 2026, up from 58.4 in June, marking the highest reading since January and a third consecutive month of expansion, signaling a faster expansion in services activity. New business continued to grow, although at a slower pace (60.2 vs 62.5), led mainly by the transportation and professional services sub-sectors, with financial and other personal services also contributing to the expansion. Employment increased at a slower pace (52.9 vs 54), supported by new recruitment and fewer staff resignations. Meanwhile, backlogs of work moved further into expansionary territory, rising to 51.2 from a neutral reading in June. Business expectations for the coming quarter strengthened further, supported by anticipated economic improvements and strong tourist arrivals for the Kandy Esala Perahera. However, broader global economic uncertainties continued to pose downside risks to the outlook.

Sri Lanka’s Services PMI rose to 58.5 in June 2026 from 56.9 in the previous month, signaling a faster expansion in business activity, supported by broad-based improvements across sectors. New business strengthened (62.5 vs. 58.0), led by the financial services sector, while insurance, professional services, and other personal services also contributed to growth. Employment returned to expansion (54.0 vs. 49.4) as multiple firms expanded their workforce. Meanwhile, backlogs of work stabilized at the neutral threshold (50.0) after contracting in May (48.1). Looking ahead, firms remained optimistic that business activity would continue to expand over the next quarter, supported by improving economic conditions and an expected increase in tourist arrivals, although global uncertainties continue to pose risks to the outlook.