PMI for Manufacturing and Services continued to expand in January

The economic activities across both manufacturing and services activities have continued to expand through January 2026, according to the Purchasing Managers’ Index (PMI), reflecting that the broader Sri Lankan economy is humming along on the back of lower interest rates and positive sentiments.
For January, the PMI reported an index value of 56.1 for manufacturing, compared to 60.9 index value for December, reflecting the persistent expansion but at a slightly slower pace, as the sector was coming off a seasonal peak.
Meanwhile, the PMI for the services sector recorded an index value of 64.5, compared to 67.9 index value for December.
Under the PMI, an index is split between an expansion and a contraction at an index value of 50.0.
An activity is neutral when an activity is landed at an index value of 50.0.
The sub-indices for New Orders and Production remained expanded through January while the sector added new employees as the Employment index also recorded 51.5 index points.
“… the Stock of Purchases registered a month-on-month increase, mainly due to inventory buildup ahead of the Chinese New Year holidays,” the statement from the Central Bank said.
The expectations for the sector over the next three months too showed an improvement as the prices, interest rates and demand conditions remain conducive.
The services activities in the month were driven mainly by the wholesale and retail trade, accommodation and food and beverage.
The financial services activities also contributed significantly to the sector growth, underpinned by the increased lending activities.
The lower interest rates provided an impetus to the lending activities as seen from the record- high monthly increases in new loans.
Sri Lanka ended 2025 with an all-time high private sector credit of Rs.2,056.1 billion, with an increase of 25.2 percent growth.
The new business activities also expanded from improved activity in education and transportation of goods and passengers, including warehousing.
Employment continued to rise as the firms hired new staff to keep up with the demand.
Favourable macroeconomic conditions, expected seasonal demand and the continued normalisation of operations after floods in December have kept the participants in the services sector upbeat about the future.