KARACHI: Pakistan’s manufacturing sector showed significant momentum in December 2025 as the HBL Pakistan Manufacturing PMI, compiled by S&P Global, edged up to 52.8 from 52.3 in November, marking its highest reading since February. The latest data indicates stronger production and a surge in demand, reflecting renewed optimism among manufacturers.
The increase in PMI signals solid growth in output, supported by an acceleration in new orders, which expanded at their fastest pace since March. Survey respondents attributed this uptick to ongoing business expansion and improvements in product quality, highlighting a more positive outlook for the sector.
Notably, new export orders registered growth for the first time in six months. Firms cited stronger international demand and enhanced product standards as key drivers behind the recovery, suggesting an improvement in Pakistan’s competitiveness in global markets. This pickup in exports could help mitigate trade pressures while supporting the broader industrial recovery.
Despite rising output, capacity pressures remained moderate. Work backlogs fell at one of the fastest rates on record, indicating that firms were able to meet demand without significant operational bottlenecks. Employment in the sector rose for the second consecutive month as manufacturers responded to heavier workloads by extending working hours and cautiously increasing staffing levels in anticipation of further order growth.
Input purchasing activity strengthened as manufacturers stockpiled raw materials to hedge against potential price increases. This led to the steepest rise in raw material inventories since the PMI survey began, reflecting confidence in sustained production growth in the near term.
Commenting on the data, Humaira Qamar, Head of Equities & Research at HBL, said that business confidence reached its highest level since July, supported by expectations of improved economic and inflationary conditions. She added that optimism was mirrored in the State Bank of Pakistan’s recent monetary policy decision, which surprised markets with a 50 basis point rate cut, signaling confidence in inflation averaging within the 5-7 percent range and in achieving the June 2026 foreign exchange reserve target.
The PMI, derived from monthly surveys of private sector manufacturing firms, tracks changes in output, new orders, employment, and inventories. For investors and analysts, it serves as a leading indicator of economic momentum and potential turning points in the business cycle, often preceding official GDP data shifts.
Overall, the December PMI reading reflects a combination of domestic production recovery, a resurgence in export demand, and increasing business confidence, providing a positive signal for Pakistan’s industrial sector and broader economic activity in the coming months.
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