Construction Growth Eases in March Amid Global Supply Pressures 📈

The Construction sector continued its expansion in March, though the momentum slowed as the Total Activity Index (PMI) moderated to 57.1 from 70.3 in February, according to the Central Bank of Sri Lanka. • Operational Challenges Activities were hampered by fuel and raw material shortages, rising costs, and logistical bottlenecks linked to the ongoing Middle East conflict. Suppliers' delivery times lengthened significantly due to transportation delays. • Growth Drivers & Pipeline New Orders: Remained robust with a steady project pipeline. Reconstruction: Work following Cyclone Ditwah (damage estimated at 4% of GDP) is a key catalyst, with rebuilding costs projected at Rs. 878 Bn. Public Investment: The 2026-2028 program allocates Rs. 2 Tn to highways, irrigation, and housing. • Labor & Procurement Employment: Index rose slightly to 57.1 (from 56.8), indicating continued hiring. Stockpiling: Firms increased procurement to hedge against expected price hikes, though some suppliers are reportedly holding back stocks. • Economic Context The sector contributed Rs. 1.9 Tn in 2025 and typically grows at 2.8x GDP. While the outlook for the next quarter remains positive, risks include labor shortages, tighter financing, and energy cost volatility, particularly impacting smaller contractors. _(Based on provisional CBSL and CT Smith Securities data)_