Construction PMI eases in August as bitumen shortage slows roadworks

The Central Bank of Sri Lanka (CBSL) yesterday said the construction sector continued to expand in August, though at a slower pace than in July, as a persistent shortage of bitumen held back road construction.

The Purchasing Managers’ Index for Construction (PMI – Construction) fell to 59.4 in August from 61.4 in July.A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction. The index, based on the Total Activity Index, had risen for three consecutive months up to July.

Many survey respondents said the ongoing bitumen shortage continued to limit progress on road construction, which curbed the industry’s overall growth. August was the third consecutive month in which firms cited bitumen supply as a constraint.

New work picked up in August. The New Orders Index rose to 62.5 from 57.1 in July, mainly because of Government-funded projects.The Employment Index slowed to 59.7 from 61.8, and the Quantity of Purchases Index eased to 59.4 from 64.7. Both remained in expansion territory. Firms continued to report persistent shortages of skilled labour and raw materials, which they said were key constraints on the sector’s growth.

The Suppliers’ Delivery Times Index stood at 59.4, down from 60 in July. The reading shows that delivery times continued to lengthen, but more slowly than in July, reflecting heavy workloads among suppliers.Firms remained positive about the next three months, supported by newly awarded projects. However, they said bitumen shortages and volatile material prices remained challenges.

Sri Lanka’s expansion contrasted with conditions in most European construction markets as of 30 September, according to S&P Global data. Construction activity contracted at a faster rate in the Eurozone, France, Italy, and the UK, and at a slower rate in Germany. Ireland continued to expand, but at a slower pace.