Construction sector on a tear as speed of activity reaches four-year highs

Sri Lanka’s construction sector is seeing resurgent activity in nearly all types of projects, sending the sector’s performance to its highest levels in four years.

Purchasing Managers’ Index (PMI) for the construction sector recorded an index value of 67.6 in September, the highest level since late 2021 when the construction sector was growing at a brisk pace, ahead of cracks appearing in the economy from the foreign currency shortage. In August, the index read 61.1.

Under the PMI, an index value of 50.0 is the threshold separating expansion from contraction.

Sector respondents have highlighted the persistent availability of projects as the predominant cause of the stellar performance.

The sector has consistently been expanding since late 2023, when the country saw increased availability of foreign currency from the recovery in tourism and remittances, and easing interest rates.

The unlocking of multilateral and bilateral funding lines a year later helped the sector gather pace, while rates came down further.

The year 2025 saw sector activity add further steam, with rates falling to rock bottom and the government sector also ramping up its infrastructure developments.

“Most survey respondents reported that nearly all types of construction projects are now becoming available, with road rehabilitation projects in particular, driving a further increase in the New Orders index in September,” the survey said.

“Further, both the Employment and Quantity of Purchases indices expanded in September, suggesting positive prospects for the construction sector,” it added.

The continuous progress in construction activities is also reflected in the performance of companies engaged in construction, construction-related sectors, and the real estate sector.

Companies have been reporting blowout performances for the September quarter.

Both the construction and real estate sectors, which together contribute roughly 12 percent to the entire economy, grew robustly in the first half, Gross Domestic Product data showed.

Meanwhile, sector participants also remain optimistic about the future, “driven by the anticipated growth momentum in construction activities,” respondents added.