Manufacturing Growth Slows to Seven-Month Low as Export Orders Plummet
Key Takeaways
• Pakistan’s manufacturing PMI fell to 51.9 in April, the slowest growth in seven months, signaling caution amid global trade tensions.
• Export orders, especially to the US, declined sharply, impacting employment and cost-cutting measures in the sector.
• Despite challenges, inflation remains low, and the PMI indicates ongoing expansion, with potential for monetary policy easing.
Karachi, Pakistan – Pakistan’s manufacturing sector experienced a slowdown in April, with the HBL Pakistan Manufacturing Purchasing Managers’ Index (PMI) falling to 51.9 from 52.7 in March, marking the lowest growth rate in seven months. This decline reflects growing concerns over global trade tensions and tariff impacts, particularly those stemming from US trade policies.
Humaira Qamar, Head of Equities & Research at HBL, highlighted that the dip in PMI is an early indicator of the headwinds facing the global economy due to US tariffs. The report pointed to a significant slump in new orders, especially export orders, which plummeted sharply. Employment levels also declined for the second consecutive month as manufacturers sought to reduce costs amid uncertain market conditions.
Pakistan’s exports to the US, which constitute 18 percent of the country’s total exports, are particularly vulnerable to any prolonged US economic stagnation or inflationary pressures. Qamar warned that such developments could extend the manufacturing sector’s downturn. However, she noted that falling commodity prices might offer some relief to manufacturers.
Despite the slowdown, the PMI remains above the 50-mark, signaling continued expansion in the manufacturing sector, supported by a favorable inflation outlook. Pakistan’s annual inflation rate dropped to 0.3 percent in April, significantly below the Ministry of Finance’s forecast of 1.5 to 2 percent. This deflationary trend has led to expectations of a possible interest rate cut by the State Bank of Pakistan, although a recent Reuters poll suggests the central bank may maintain the current 12 percent rate due to geopolitical and inflation concerns.
Launched in February by HBL and S&P Global, the PMI serves as a vital gauge for tracking Pakistan’s manufacturing performance, offering timely insights into the sector’s health amid global economic uncertainties.
