Sri Lanka’s manufacturing, services growth slows August.

Sri Lanka’s manufacturing and service sectors continued to expand in August 2024, with both sectors reporting index values above 50, according to the Purchasing Managers Index (PMI) compiled by the central bank. The Manufacturing PMI was 55.5 in August, down from 59.5 in July, with growth mainly driven by the food and beverage manufacturing sector. While all sub-indices, except employment, remained above the neutral threshold, employment decreased on a month-on-month basis in August.

The Services PMI also showed growth, recording 65.2 in August compared to 71.1 in July. The expansion in business activities was broad-based, with significant improvements in sectors such as wholesale and retail trade, transportation services, and financial services. Additionally, business activities in personal services, particularly in entertainment and recreation, showed strong growth. However, activities in telecommunication, real estate, and IT programming consultancy remained unchanged from the previous month.

Sri Lanka’s central bank has played a role in maintaining stability with a stable exchange rate and largely deflationary policies, targeting inflation below 5%. Despite this, the country has faced challenges due to past issues, such as printing money to meet inflation targets and currency depreciation. These measures led to a loss of business confidence and import controls, compounded by existing exchange controls.