Despite the prevailing political uncertainty, Sri Lanka's service sector grew at a higher pace in October, underpinned by a strong upturn in business activities and new businesses, the Central Bank announced.
The expansion in business activities was seen mainly across financial services, transportation and warehousing sub sectors. However, respondents of the Central Bank survey cited that the depreciation of the local currency had an adverse impact on import volumes and thereby on their activity growth.
New businesses also expanded across financial services and professional services sub sectors. Employment levels grew at a higher rate in October owing to the expansion in business activities.
Service providers have expressed optimism on the three months business outlook strengthened in October 2018 due to upcoming festive season and the peak season for tourism.
However, respondents raised concerns over the current political situation and the weakening of the domestic currency which could moderate the realisation of expectations.
Prices charged by the service sector increased at a higher rate while the expected labour cost in the service sector also increased during October due to bonus payments