Sri Lanka’s manufacturing and services sectors recorded a notable improvement in May 2026, signalling a strengthening economic recovery despite ongoing global uncertainties, according to the latest Purchasing Managers’ Index (PMI) released by the Central Bank of Sri Lanka (CBSL).

The Manufacturing PMI rose sharply to 56.6 in May from 42.6 in April, indicating a significant expansion in industrial activity. All sub-indices remained above the neutral threshold, reflecting broad-based growth across the sector. New Orders increased to 52.6 from 36.4, driven primarily by the food and beverages, textiles, and apparel industries. Production also expanded strongly, rising to 54.6 from 30.5, supported by a higher number of working days during the month. Meanwhile, Stock of Purchases improved in line with increased production and order volumes.

Despite the positive performance, many manufacturers continued to express concerns regarding the challenging operating environment created by the ongoing Middle East conflict.

The Services PMI also strengthened considerably, rising to 56.9 in May from 46.7 in April. Growth was led by the financial services, professional services, and personal services sectors, while real estate, information technology, and goods transportation also reported healthy expansion. New Business activity increased to 58.0 from 48.9, reflecting renewed demand across several industries.

Although employment levels declined due to retirements, resignations, and contract expirations, business expectations for the next three months remained positive. The CBSL noted that anticipated growth in tourist arrivals during the upcoming Perahera season and improving domestic economic conditions are expected to support further expansion. However, global geopolitical uncertainties continue to pose risks to future business confidence and economic momentum.