Key Takeaways
- The HBL Pakistan Manufacturing PMI rose to 51.7 in July from 50.8 in June.
- Domestic demand and resilient export orders drove the improvement.
- Manufacturing activity strengthened, with the fastest output growth in five months.
The HBL Pakistan Manufacturing Purchasing Managers' Index (PMI) increased to 51.7 in July from 50.8 in June, marking the strongest expansion in manufacturing conditions in four months.
This improvement was primarily driven by a recovery in domestic demand and continued resilience in export orders, according to the latest data released by HBL.
Manufacturing activity strengthened during the month, with the fastest expansion in output growth in five months. This prompted firms to increase purchasing activity and employment for the first time since March.
While export orders continue to support overall activity, their relative contribution softened as domestic demand emerged as the primary driver of sector recovery.
Encouragingly, easing inflationary pressures were observed, with both input cost and output price inflation moderating despite persistent increases in raw material and fuel costs.
Humaira Qamar, Head of Equities & Research at HBL, commented on the latest PMI data. She noted that 'The softer cost environment aligns with our expectation of a gradual disinflationary trend through FY27.'
Despite these positive indicators, elevated geopolitical risks continue to cloud the near-term outlook, according to Qamar.
Against this backdrop, the State Bank’s decision to keep the policy rate unchanged at 11.5% is seen as appropriate for supporting economic recovery and anchoring inflation expectations.
The softer cost environment aligns with our expectation of a gradual disinflationary trend through FY27.
Humaira Qamar, Head of Equities & Research – HBL
