Construction sector expands at faster pace

The construction sector appears to have gotten a new life line from the resumption of the stalled projects and the availability of new ones as industry stakeholders expressed confidence for the sector in the period ahead.

The Purchasing Managers’ Index (PMI) for the sector recorded an index value of 61.1 for August, slightly higher than the 60.0 in July, signalling expansion in the activity at a slightly faster level.

This was the highest from over a year as the last time the sector had a higher index value was in July 2024 when it read at 62.9 index points.

What underpinned this growth in August was the fact that the projects, both stalled ones as well as new ones, are coming back again.

The government was also seen ramping up its activities in public goods although they are well short of spending what they allocated for such work at the beginning of this year.

For instance, the government has not yet spent even 25 percent of the Rs.1.3 trillion worth of funds allocated for public investments from the budget 2025 presented in February this year.

Building work in the private sector are too bustling due to the rock bottom interest rates as well the further softening in prices of construction related materials.

The Colombo consumer price index for September showed that such construction material prices have eased somewhat, further reinvigorating construction sector activity.

The resumption of most of the suspended projects has in fact strengthened the confidence of the construction sector, the PMI survey said.

The sector has seen new construction work particularly from the road development side as well from supply of water, becoming more common.

In a further positive sign, the sector also saw employment in the sector rising too which shows that the sector has begun hiring new people to work in the sites as project work is increasing.

Quantity of purchases sub-index too rose at a higher pace reflecting optimism for continued growth in the construction sector work.

“Meanwhile, the suppliers’ delivery time further lengthened during the month, driven by the increase in demand for construction material”, the survey stated.

The continuous expansion in construction is an important sign that the overall economy is humming faster, which in the first half of the year grew by 4.8 percent.