By Digital Spartans 
The HBL Pakistan Manufacturing PMI moderated to 51.8 in January, slightly down from 52.8 in December, signaling continued expansion in the sector but at a slower pace. This marks the third consecutive month the index has stayed above the neutral 50.0 mark, indicating that operating conditions remain positive, albeit more moderate.
A primary factor behind the slowdown was softer growth in new orders. Manufacturers noted that supply-side constraints, including higher electricity costs and persistent load shedding, limited their ability to accept and process additional orders. On the export front, demand remained subdued, with new foreign orders falling for the sixth time in seven months. Analysts attributed this to shifting U.S. trade tariffs, which have increasingly benefited competing countries.
Despite these challenges, production continued to expand modestly, though inflationary pressures and adverse weather conditions impacted operations. With thinner order books, firms reduced backlogs, while employment levels remained broadly stable. Finished goods inventories declined for the first time in three months as manufacturers relied on existing stock to meet sales amid ongoing power shortages.
Kumail Chevelwalla, Team Lead for Equities & Research, commented, “Despite the PMI trending above 50.0, the Future Output Index fell to the lowest level on record since its launch in May 2024. Concerns over trade tariffs and persistent inflation are weighing on business sentiment. Growth is expected to be driven mainly by domestic demand, with limited support from external markets.”
The State Bank of Pakistan has upgraded its GDP growth forecast to a 3.75%-4.75% range, citing stronger-than-expected activity in the manufacturing sector. However, the central bank also highlighted potential risks in the export environment, projecting a 6% decline in exports for fiscal year 2026.
The latest PMI data underscores a mixed outlook for Pakistan’s manufacturing sector. While domestic demand continues to sustain growth, external pressures, rising input costs, and energy constraints remain key challenges that could temper future expansion. Businesses are adjusting strategies to maintain output and manage inventories, navigating an environment of steady growth with cautious optimism.