By The Pulseline News Desk
Sri Lanka’s construction sector continued to expand in August, but growth slowed as an ongoing shortage of bitumen disrupted road construction and weighed on the industry’s overall momentum.
The Purchasing Managers’ Index (PMI) for construction, compiled by the Central Bank of Sri Lanka (CBSL), fell to 59.4 in August from 61.4 in July, indicating continued expansion but at a slower pace.
CBSL has said the shortage of bitumen had emerged as a key constraint, with many firms reporting that the lack of the road construction material was limiting progress on projects.
“Many survey respondents highlighted the ongoing bitumen shortage, which continued to constrain road construction progress, limiting the overall growth momentum of the construction industry,” CBSL has said.
Government projects drive new orders
Despite the supply-side constraints, demand for construction services strengthened during the month.
The New Orders Index has increased to 62.5 in August from 57.1 in July, with CBSL attributing the improvement mainly to government-funded projects.
The increase suggests that construction companies continued to receive new work even as shortages of key materials affected their ability to execute projects at the same pace.
However, the Quantity of Purchases Index has slowed, declining to 59.4 from 64.7 in July, reflecting the impact of supply constraints and difficulties in securing materials.
The situation highlights a growing gap between project demand and the industry’s ability to maintain the pace of construction amid shortages and price pressures.
Skilled labour remains a constraint
Labour shortages also continued to affect the sector.
The Employment Index stood at 59.7 in August, down from 61.8 in July, although employment continued to expand.
CBSL has said many firms continued to report shortages of skilled workers, while persistent shortages of skilled labour and raw materials remained among the key constraints to sectoral growth.
The combination of material shortages and a lack of skilled workers could create additional pressure on construction companies as government-funded projects gather pace.
Material prices add to pressure
Supply-side difficulties were also reflected in supplier delivery times.
The Suppliers’ Delivery Time Index remained elevated at 59.4 in August, only slightly below 60.0 in July, indicating continued pressure on suppliers amid prevailing workloads.
At the same time, fluctuations in material prices continued to create uncertainty for construction firms.
CBSL has said bitumen shortages and fluctuations in material prices remained key challenges facing the sector.
For an industry heavily dependent on uninterrupted supplies of construction materials, such disruptions can affect project timelines and raise costs, particularly for road infrastructure projects.
Expansion continues, but constraints persist
The August PMI indicates that Sri Lanka’s construction industry remains in expansion territory, supported in part by government-funded projects and stronger new orders.
However, the slowdown in the headline index points to mounting supply-side pressures.
The key challenge for the sector is therefore no longer simply generating new construction activity, but ensuring that contractors have adequate access to bitumen, raw materials and skilled labour to convert the pipeline of projects into completed infrastructure.
With government-funded construction activity continuing to support demand, the resolution of material shortages and supply bottlenecks will be critical to sustaining the sector’s growth in the months ahead.
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