The HBL Pakistan Manufacturing Purchasing Managers’ Index (PMI) recorded an improvement in July 2026, rising to 51.7 from 50.8 in June and marking the strongest improvement in manufacturing conditions in four months. The latest reading indicates a return to expansion in the manufacturing sector, supported by recovering domestic demand and continued strength in export-related orders.
The improvement in manufacturing activity remained moderate, reflecting a gradual recovery environment as businesses continued to operate amid ongoing economic uncertainties and external risks. The sector showed positive momentum during July, although concerns related to renewed geopolitical tensions and broader global conditions continued to influence business confidence and future expectations.
According to the latest PMI data, new orders increased during July after experiencing contraction in June. The recovery in demand was supported by improved customer sentiment, competitive pricing strategies, and stronger domestic market activity. The increase in new orders contributed to the fastest growth in manufacturing output recorded in five months, encouraging companies to increase purchasing activity and expand employment for the first time since March 2026. While export orders remained an important contributor to overall manufacturing performance, their relative impact declined during July as domestic demand became the primary driver behind the sector’s recovery. The shift highlights improving local market conditions and increased business activity among manufacturers serving domestic consumers.
The improvement in demand conditions was also accompanied by easing inflationary pressures across the manufacturing sector. Both input costs and output prices recorded slower increases during the month, despite continued pressure from higher raw material and fuel expenses. The moderation in price pressures suggests improving cost conditions for businesses and supports expectations of a gradual reduction in inflationary trends. Commenting on the latest PMI results, Humaira Qamar, Head of Equities & Research at HBL, said that the softer cost environment is consistent with expectations of a gradual disinflationary trend during fiscal year 2027. However, she noted that elevated geopolitical risks continue to create uncertainty around the short-term economic outlook.
Humaira Qamar further stated that the State Bank of Pakistan’s decision to maintain the policy rate at 11.5% provides a balance between supporting economic recovery and maintaining inflation expectations. She added that continued improvement in manufacturing activity will depend on consistent economic policies and a stable external environment that supports both domestic demand and export growth. The rise in HBL Pakistan Manufacturing PMI reflects improving confidence among manufacturers as businesses respond to stronger demand conditions and easing cost pressures. However, sustained growth in industrial activity will require continued economic stability, supportive policies, and favourable market conditions to maintain momentum in the coming months.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.