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Businesses add jobs, pin hopes on year-end demand

Sri Lanka’s private sector continued to expand in September, with services growing at a slower pace while manufacturing held steady, as businesses looked to year-end demand to sustain momentum.

The Purchasing Managers’ Index (PMI) for services recorded 60.5, signalling continued expansion, although at a slower rate than in August. The manufacturing index remained unchanged at 53.0, supported by stronger new orders and production in food and beverages and textiles and wearing apparel.

A reading above 50 indicates expansion compared with the previous month, while a reading below that level signals contraction. The September readings point to continued growth across both sectors, with firms adding workers and anticipating further improvements in activity over the next three months. However, global uncertainties remained a risk to the services outlook.

Financial services led the increase in services business activity, with education and professional services also making notable contributions.New business increased, primarily driven by financial services, alongside positive contributions from insurance, education, professional services and other personal services.

Services firms stepped up recruitment to meet operational requirements and support business expansion. Backlogs of work declined, although at a slower pace than in August. Expectations for services activity over the next three months continued to improve, supported by favorable macroeconomic conditions, increased tourist arrivals and the approaching festive season.

Manufacturers also remained positive about the coming three months, largely reflecting expectations of stronger seasonal demand towards the year end. The outlook for manufacturing activities over the next three months remains positive, driven largely by optimism on year-end seasonal demand, the release said.

Within manufacturing, the expansion in new orders and production was largely attributed to positive developments in the food and beverages and textiles and wearing apparel industries. Manufacturing employment continued to increase, although recruitment expanded at a slower pace. Stocks of purchases moved towards the neutral threshold, indicating broadly unchanged inventory levels, while suppliers’ delivery times continued to lengthen.