Pakistan, Karachi – 01 August 2025:

The HBL Pakistan Manufacturing Index (PMI) remained unchanged at 50.5, mirroring the modest expansion seen in June’s 10-month low. The PMI is compiled by the renowned financial analytics firm S&P Global and is widely used among analysts as a leading indicator to assess the state of the economy.

Factory output rose at a slightly improved rate in July, primarily due to the completion of existing orders while new orders continued to slide for the third straight month. Survey participants attributed the subdued order flow to rising costs of raw materials, energy, and taxation.

New orders were also weighed down by a decrease in fresh export orders, marking the third decline in the last four months. This aligns with SBP data indicating a 9% QoQ decline in exports in the second quarter of the year. Manufacturers cited muted global demand and elevated tax burdens as key factors.

Work backlogs depleted at a faster rate and were down for the seventh consecutive month amid lackluster demand and order completion. As a result, employment contracted for the second month running, with firms scaling down staffing due to lighter workloads and cost management strategies.

Kumail Chevelwalla, Team Lead, Equities & Research – HBL, commented on the latest release saying “Despite these headwinds, business confidence strengthened, reaching a three-month high, driven by optimism around improving macroeconomic and geopolitical conditions, coupled with expansion initiatives and product rollouts. While the monetary easing cycle began more than four quarters ago, the anticipated impact of policy rate cuts has yet to be manifested in the industrial sector, with LSM contracting 1.2% in the eleven months of fiscal year 2025. However, we expect strong business confidence, further rate reductions and better consumer spending power to bode well for the real economy in the medium-term.”