Sri Lanka services PMI data for November 2025 indicates that economic activity in the services sector continued to expand, but at a markedly slower pace, reflecting cautious consumer sentiment, weather-related disruptions, and a moderation from October’s strong performance.
Sri Lanka services PMI shows slower expansion as demand softens in November
Sri Lanka’s services sector maintained its expansionary trajectory in November 2025, though momentum slowed considerably compared to the previous month, according to the latest Purchasing Managers’ Index (PMI) released by the Central Bank of Sri Lanka. The index eased to 50.5 in November from a robust 66.0 in October, signalling marginal growth just above the neutral threshold of 50.
The deceleration highlights a period of consolidation following a strong post-recovery surge earlier in the quarter. While activity levels remained in expansion territory, the softer reading reflects a combination of seasonal adjustments, adverse weather conditions, and a more measured pace of demand across key service segments. Nevertheless, underlying indicators suggest that the sector continues to demonstrate resilience amid a complex operating environment.
Accommodation, food, and beverage services emerged as the primary contributors to growth during the month. This segment benefited from ongoing domestic travel, year-end social activity, and tourism-related demand, albeit at a more moderate level than seen in October. Industry participants noted that while customer inflows remained positive, growth was uneven and sensitive to external factors such as weather-related disruptions that affected mobility and consumer spending patterns.
Financial services also recorded continued strengthening in November, providing a stabilising influence on overall sector performance. Increased lending activity supported growth, reflecting improved confidence among both consumers and businesses. The steady expansion of financial services underscores the role of credit availability and banking sector stability in sustaining broader economic activity, even as other service sub-sectors experienced slower momentum.
New business generation, a key forward-looking indicator, rose at a reduced pace during the month. The new business sub-index declined to 53.6 from 61.5 in October, indicating that while demand continued to grow, the rate of expansion moderated significantly. This suggests that businesses are encountering a more cautious market environment, with clients deferring decisions or scaling back discretionary spending amid uncertainty.
Employment conditions, however, showed improvement, offering a more encouraging signal within the broader PMI data set. The employment index increased to 55.7 in November from 52.5 in October, reflecting higher recruitment activity. Firms cited seasonal operational requirements and the need to maintain service quality during peak periods as reasons for increased hiring. This rise in employment indicates that service providers remain cautiously optimistic about near-term demand and operational continuity.
Another notable development was the increase in backlogs of work, reversing a three-month trend of continuous decline. The accumulation of outstanding work suggests that service providers are experiencing capacity pressures in certain areas, even as overall demand growth moderates. This could reflect inefficiencies caused by weather disruptions or resource constraints rather than a surge in new orders, but it nonetheless points to ongoing activity within the sector.
Despite these positive elements, sentiment among service sector participants was tempered by concerns over external challenges. Some respondents highlighted disruptions to consumer demand resulting from adverse weather conditions, which affected travel, footfall, and service delivery in several regions. These factors contributed to the moderation in growth and reinforced a cautious outlook for the near term.
From a macroeconomic perspective, the November reading of the Sri Lanka services PMI suggests a transition phase rather than a reversal. The sharp slowdown from October’s elevated level was partly expected, given the exceptionally strong performance in the previous month. A PMI reading marginally above 50 indicates that expansion continues, albeit at a pace that is more sustainable and reflective of prevailing economic conditions.
Analysts note that the services sector remains a critical pillar of Sri Lanka’s economic recovery, accounting for a significant share of employment and value creation. Continued growth, even at a slower rate, supports income generation and consumption, helping to stabilise overall economic activity. The resilience shown by financial services and hospitality-related segments underscores the sector’s adaptive capacity in the face of short-term disruptions.
Looking ahead, the trajectory of the services sector will depend on several factors, including weather conditions, consumer confidence, tourism inflows, and credit growth. If adverse weather impacts ease and seasonal demand strengthens toward the end of the year, service activity could regain some momentum. At the same time, sustained employment growth and manageable backlogs may help cushion the sector against external shocks.
The Central Bank’s assessment that “the pace of strengthening has moderated” captures the current state of play accurately. Rather than signalling a downturn, the November PMI reading points to a recalibration after a period of rapid expansion. Businesses appear to be adjusting expectations, managing capacity carefully, and focusing on operational efficiency as they navigate a more balanced growth environment.
In this context, the Sri Lanka services PMI serves as a timely barometer of economic conditions, highlighting both the sector’s resilience and the challenges it faces. While growth has slowed, the continued expansion across key indicators suggests that the services sector remains on stable footing, providing cautious optimism as the economy moves into the final weeks of the year.