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Purchasing Managers’ Indices for Manufacturing and Services spike in August

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Manufacturing PMI recorded an index value of 49.6 in August 2022, up from July, yet at slightly below the neutral threshold level. The rate of decline of manufacturing activities was softened with the improvements reported in Employment and Stock of Purchases compared to the previous month while Production and New Orders declined at a slower pace. Further, the Suppliers’ Delivery Time was shortened with the improved mobility.

Overall Production and New Orders declined marginally in August 2022 compared to July 2022. However, considering the largest manufacturing sub-sectors, an increase in Production and New Orders was reported in manufacture of textile and apparel sector, limiting the overall decline to a marginal level, while the manufacture of food & beverage sector maintained Production and New Orders at the same level as of July 2022. Many respondents revealed that improved fuel availability on a month-on-month basis positively affected manufacturing activities. Meanwhile, Employment increased in August 2022, particularly in the manufacture of textile and apparel sector which frequently suffered by scarcity of employees. The increase reported in Stock of Purchases was mainly due to higher activity levels anticipated in the coming months. Some respondents mentioned that slightly improved foreign exchange availability in the market allows them to open letters of credit to import materials.

Expectations for manufacturing activities for the next three months indicated an improvement in August 2022, for the first time since February 2022, reflecting an improved business sentiment on gradually restoring stability and anticipating a more conducive environment for manufacturing activities in the coming months despite demand side impediments.

Services PMI returned to the growth territory in August 2022, recording an index value of 51.7 after declining for four consecutive months. This expansion was driven by the increases observed in New Businesses, Business Activities and Expectations for Activity. New Businesses expanded in August 2022 compared to July 2022, particularly with the improvements observed in financial services, real estate, transportation and other personal activities sub-sectors. With the increase in mobility amid the easing of fuel crisis Business Activities in the services sector increased in August following a continuous decline for four months in a row. Accordingly, the business activities mainly related to financial services, other personal activities, real estate and insurance sub-sectors showed improvements compared to the previous month. Nevertheless, as highlighted by many respondents, the other supply side constraints continued to negatively affect the business activities of some sub-sectors. In addition, the low demand lead by high inflation reportedly weighed on business activities. As such, wholesale and retail trade sub-sector showed a major decline during the month. Employment continued to fall in August due to increasing resignations besides halt in new recruitments, non-renewal of existing employment contracts and retirements. Meanwhile, Backlogs of Work dropped during the month mainly with the ease of transportation difficulties faced by the staff.



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Environmental devastation seen as precipitating economic crisis in Northern Sri Lanka

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Environmentalists and officials on an on-sight tour in Sri Lanka’s North.

As parched soil cracks underfoot and once-thriving fields lie fallow, the farmers of Mannar are living on the frontlines of a crisis that is no longer just environmental — it’s economic. Climate change has tightened its grip on this northern region, and with each failed monsoon and dwindling harvest, the livelihoods of entire communities are evaporating.

The Centre for Environmental Justice (CEJ), along with local stakeholders, has raised urgent concerns over the increasingly hostile conditions faced by farmers in the region. At the heart of the problem are erratic weather patterns — prolonged droughts, unpredictable rainfall, and extreme heat — all of which disrupt the delicate balance required for traditional farming practices.

“The erratic weather patterns triggered by climate change are not only drying up water sources but also pushing already vulnerable farming communities deeper into poverty, Dilena Pathragoda, Executive Director, CEJ told The Island Financial Review.

He added: “The economic consequences are severe — from crop failures to loss of livelihoods — and without timely interventions and climate-resilient strategies, the long-term sustainability of agriculture in regions like Mannar is in jeopardy.”

In 2024 alone, nearly 3,000 acres of paddy land in Mannar District were left uncultivated due to lack of water, according to data from local agrarian offices.

In other words, this represents an estimated loss of over Rs. 225 million in potential harvest income, based on average yields and market prices. Farmers who once cultivated rice, onions and vegetables with predictable seasonal success now face devastating uncertainty.

The failure of rain-fed tanks (reservoirs) and the drying up of canals have made irrigation nearly impossible in some areas. In Nanattan and Musali divisions, water availability dropped by some 60 per cent compared to historical averages. As water becomes scarcer, so do incomes, leading many families to take on debt or abandon agriculture altogether in search of daily-wage labour.

This agricultural downturn is having ripple effects throughout the local economy. In Mannar, where over 60% of households depend directly or indirectly on farming, the collapse of agricultural productivity has led to rising food prices, shrinking local markets, and reduced cash flow for small businesses. Fertilizer vendors, seed suppliers and even transport workers are reporting significant losses.

“Some farmers have seen their seasonal incomes drop from Rs. 200,000 to under Rs. 50,000, noted one local agriculture officer. “Many are defaulting on informal loans and are now relying on relief aid to survive.”

Economists warn that this trend, if unchecked, could contribute to broader socio-economic instability. Rural depopulation, youth migration, and heightened inequality are already being observed in vulnerable districts. Women, in particular, face added burdens as household food security becomes more precarious and access to clean water requires greater physical labor.

Despite these challenges, experts insist that solutions are within reach. Climate-resilient farming techniques — such as drip irrigation, drought-tolerant crops, and community-managed water systems — have shown promise in pilot projects across other dry zones. However, scaling these up requires political will, coordinated planning, and substantial investment.

Environmental advocates also call for a shift in national agricultural policy. “Rather than pouring money into outdated infrastructure or monoculture subsidies, Sri Lanka must pivot towards sustainable, adaptive farming models, said Pathragoda. “This includes better support for farmers’ education, access to technology, and integrated land and water management.”

Civil society groups, including CEJ, are urging both the government and international donors to treat the Mannar crisis as a wake-up call. Climate finance mechanisms, they argue, must be made accessible to grassroots communities, not just large-scale development firms. Moreover, climate justice must take center stage — recognizing that those suffering most have contributed least to the global emissions causing these disruptions.

As Sri Lanka navigates an uncertain economic recovery, ensuring food security and rural resilience is more than an environmental imperative — it’s a matter of national stability, Pathragoda stressed.

By Ifham Nizam

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CSE and NCE partner to empower Sri Lankan exporters

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The Colombo Stock Exchange (CSE) and the National Chamber of Exporters of Sri Lanka (NCE) entered into a strategic partnership to support Sri Lankan exporters by enhancing their access to capital market opportunities and broadening visibility for their businesses.

The partnership agreement was signed by Shiham Marikar, Secretary General / CEO, The National Chamber of Exporters of Sri Lanka, and Ms. Vindhya Jayasekera, Chief Executive Officer Designate, CSE. The signing ceremony was attended by Ms. Dilini Gamlathge, Assistant Director, Member Services/Operations, The National Chamber of Exporters of Sri Lanka; Ms. Punyamali Saparamadu, SVP Commercial, CSE; Ms. Himashi Wickramasinghe, Manager, Commercial, CSE; Ms. Shivandini Liyanage, SVP, Legal, Enforcement and Compliance, CSE; and Kanishka Gunawardana, Manager, Enforcement and Compliance, CSE.

This partnership with the CSE will provide NCE members—both experienced exporters and aspiring ones—with access to vital capital market knowledge and services to support their business expansion efforts.

This collaboration aims to offer exporters tools and resources to strengthen their market presence and growth potential. It also creates a platform for SMEs within the export sector to consider listing on the Colombo Stock Exchange, particularly through the Empower Board—dedicated to facilitating capital raising for small and medium-sized businesses.

Through this partnership, CSE will also gain direct access to a network of established exporters, enhancing the reach of capital market education, awareness-building, and strategic financing solutions among key players in Sri Lanka’s export economy.

The collaboration will further enable opportunities for joint forums, knowledge-sharing sessions, and networking events, providing exporters with guidance on alternative avenues for capital generation and highlighting the benefits of corporate good governance and transparency through listing.

This partnership adds credibility to the CSE and NCE’s shared efforts and signals trustworthiness to potential stakeholders, offering significant advantages for fostering growth, strategic opportunities, and long-term development within Sri Lanka’s export sector.

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A case for a visa-free tourism regime in SL

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Nihal Perera: “Visa-free travel needed.”

Sri Lanka should not have any restrictions for tourist arrivals and a visa-free regime is the need of the hour to woo more visitors, said travel and aviation expert Nihal C.B. Perera.

The founder of a family-owned company in Sri Lanka, Sparklink Travels, Perera said that Sri Lanka should offer the same ‘Visa Free facility’ initiated by Singapore and now successfully implemented by Thailand.

A former Ceylon Tourist Board, Development and Publicity Director, he said that during his time, they leased or gave several unused state land areas to build hotels. “But we told the investors that the construction has to start in six months, and this happened.”

One such venture was the opening of the Pegasus Reef Hotel at Wattala.

Perera also initiated the creation of special tourism zones in Bentota, Hikkaduwa and several other areas.

After a nearly 15-year stint at the Tourist Board, he formed his own travel company, Sparklink Travels, in 1979 with just 4 employees. “With the rapid expansion of business, and being recognized as an IATA-accredited travel agency, we increased our employee strength and moved into our own four-storey building in Bambalapitiya. We also opened a branch in Australia, he said.

“After the COVID pandemic, we also negotiated with airlines and refunded all passenger tickets purchased and cancelled due to COVID-19, Perera explained.

He recalled the days when people were issued small booklet-type air tickets and how his staff had to visit the airline offices to collect them. Perera added: “The online has changed these and I think this is a time-saving move.

“Unlike two decades ago, online and payment gateways have enabled people to book their own air tickets from home and we too have changed our strategies to find new businesses.”

Today, Sparklink Travels continues with his son Praki Perera, heading the company’s operations in Sri Lanka and Australia.

Their dedication ensures that the company remains a premier provider of air travel, cruises and tours, with professional services tailored to enhance the true essence of travel.

Perera, who has been a pioneering force in Sri Lanka’s tourism sector, was also honored as a ‘Tourism Legend’ at the annual industry awards.

By Hiran H. Senewiratne

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