Construction activity rebound persists for third consecutive month

In a further sign that the country’s beleaguered construction sector is expanding steadily, the construction sector Purchasing Managers’ Index (PMI) recorded an index value of 55.9 for March.
Under the PMI, a contraction in activity and an expansion are split at the index value of 50.0.
March marked the third month in a row that the construction sector activity in the country was steadily gaining steam, as the projects became available with the funds also gradually following.
The government and multilateral lender-funded projects are once again back in force, although the tender process is rife with stiff competition on pricing.
“New Orders increased in March at a slower pace on a month-on-month basis,” the survey said.
The construction sector accounted for a significant share in the Sri Lankan economy but it fell into a prolonged decline for nearly two years, due to the shortage of foreign currency and also the sharply higher interest rates.

The largely government-funded projects also came to a halt from 2022 onwards, as the government, under the instructions of the International Monetary Fund, decided to fix the budget by raising revenues and repurposing most of the capital expenditure allocated for such projects.
As now the government is over achieving the revenue budgets, after taxing the people and firms to the hilt, it is now in a better place to reactivate some or all of these big infrastructure projects, which were put off at the time.
This is the sector that generated more employment and more economic benefits going to farthest corners of the economy until the good governance government in 2015 halted some of the mega projects at the time, for alleged but never found corruption and then by the pandemic before things came to a halt with the economic crisis.  
“The Employment continued to decline against the backdrop of continuous turnover of experienced staff and cautious hiring of employees,” the respondents have said.
Meanwhile, the quality of purchases has also increased, due to the increase in activity levels.
In a further positive development, the prices of certain types of construction materials have also declined in March.
This should, combined with the lower interest rates, kick off a cycle of building houses, and commercial and real estate properties, after years of near lack of activity.
However, most firms expect the construction activity to remain at the current levels in the next three months.