Sri Lanka’s services and manufacturing sectors both expanded in March 2026, according to Purchasing Managers’ Index data compiled by the Central Bank, signalling resilient economic activity despite the Middle East energy crisis.
The services PMI rose to 59.4 from 54.4 in February, driven primarily by financial services activity. The CBSL said the expansion of new businesses was supported by “significant growth in insurance and pension funding activities,” with broad-based improvements across sectors including wholesale and retail trade, which benefited from festive demand.
Employment in the services sector increased as firms expanded their workforce to meet rising consumer demand ahead of the Avurudu season, the central bank said.
The manufacturing PMI surged to 66.7 from 56.8, supported by heightened seasonal demand — particularly in food and beverages and textile manufacturing. However, the CBSL noted that “many respondents reported a tight production environment, mainly attributed to raw material and fuel shortages, rising costs, and logistical constraints.”
Some firms reported precautionary stocking to safeguard production pipelines against potential disruptions from the ongoing Middle East conflict. Suppliers’ delivery times continued to lengthen due to demand pressures and shipping-related disruptions.
Despite the strong March readings, both surveys flagged downside risks. Services firms highlighted the impact of the Middle East conflict and broader global uncertainty, while manufacturing expectations for the next quarter were “somewhat moderated by uncertainties related to the ongoing Middle East conflict.”
The March PMI data will feed into the IMF’s assessment of Sri Lanka’s economic trajectory as the programme enters its next phase.
