Construction sector inches toward normalcy in August

•  Construction PMI for August records a Total Activity Index value of 47.0
• Lack of new projects continue to have severe adverse impact on industry
• Limited availability of local and foreign-funded construction projects still a major concern

Sri Lanka’s construction sector continued to show constrained performance in August 2023, although it did move towards the neutral threshold, the construction Purchasing Manager Index (PMI) showed.
The latest construction PMI survey results released by the Statistics Department of the Central Bank showed that the Total Activity Index recorded a value of 47.0.
As per the respondents, firms tend to undercut prices to secure the limited available projects in a highly competitive tender bidding process. The lack of new projects continued to have a severe adverse impact on the industry as reflected by the continuous decline in new orders.

The survey results also highlighted that many respondents sharing the limited availability of local and foreign-funded construction projects still being a major concern in the industry. In this background, firms laid off contract-based employees to scale down operations as reflected by the continuous decline in employment. Further, the quantity of purchases continued to decline, yet at a slower rate during the month.
In the meantime, suppliers’ delivery time was shortened during the month mainly due to reduced pressure on supplier capacity.
The report noted that the sentiment among the firms towards the next three months remained positive as they experienced an improvement in the availability of projects from September mainly due to the expected recovery in the economy.