Stable prices, favourable weather accelerate local construction growth in January

Sri Lanka’s construction sector continued to expand in January, supported by stable prices and favourable weather, which accelerated the completion of ongoing projects, the Central Bank of Sri Lanka said.

The sector PMI, the monthly gauge of construction sector health, rose to 52.9 in January, reflecting sustained industry activity. In December 2024, the sector recorded an index value of 51.4.

Under PMI, an index value above 50.0 indicates an expansion as an activity is split between an expansion and a contraction at 50.0 level. If a certain activity is at 50.0 level, then it shows that such activity has neither expanded nor contracted. 

“Most survey respondents mentioned that prevailing business conditions, particularly stable price levels and favourable weather, had expedited the completion of ongoing construction projects,” the Central Bank said. However, it noted that maintaining a steady pipeline of new projects remains critical for firms to sustain momentum.

New orders picked up during the month, with survey respondents citing increased tendering opportunities from private investors alongside foreign-funded construction projects. The Quantity of Purchases index also rose, signalling improved operations across the sector. Meanwhile, employment contracted at a slower pace, while supplier delivery times remained extended.

According to the survey, firms expect an improvement in industry conditions over the next three months, driven by a gradual increase in government-funded infrastructure projects, the statement added.