Pakistan’s manufacturing sector showed clear signs of recovery in November 2025, as the HBL Pakistan Manufacturing PMI, compiled by S&P Global, rose to 52.3 from 49.6 in October, signaling a return to expansion after three consecutive months of contraction. This marks the first rebound in six months, largely driven by an increase in new orders and rising confidence among manufacturers regarding future output.
The resurgence in manufacturing activity is primarily attributed to stronger domestic demand, which offset continued weakness in export orders. Export demand has now declined for five consecutive months, with manufacturers citing inflationary pressures, high taxation, and power supply disruptions as significant challenges to fulfilling overseas contracts. Despite these obstacles, the renewed confidence from domestic clients has been a key factor in lifting sector sentiment.
Production volumes surged in November at the fastest pace since the beginning of the year. Employment also rose for the first time in six months, reflecting the sector’s improved outlook and manufacturers’ willingness to invest in workforce expansion. Purchasing activity followed suit, increasing after seven months of decline. This uptick was partly driven by the need to hedge against rising input costs, as businesses sought to secure essential raw materials in advance.
Input prices climbed sharply during the month, recording the fastest increase since February 2025. Manufacturers reported higher costs for raw materials, fuel, and taxes as the main drivers of inflationary pressure. However, the rise in selling prices was comparatively modest, as businesses absorbed part of the increased costs to remain competitive in a challenging market environment.
Commenting on the outlook, Humaira Qamar, Head of Equities & Research, noted that “Manufacturers are confident that output will rise over the coming year, supported by plans for business expansion and new product launches, although inflationary pressures and subdued export performance remain key challenges for the sector. Given elevated inflation expectations, concerns over a widening trade deficit, and the lagged impact of previous reductions, we expect a status quo from the central bank in its December meeting.”
The November PMI data indicates that while the sector is still navigating challenges, there is a clear momentum towards growth. Analysts see this as a positive sign for Pakistan’s industrial landscape, suggesting that domestic demand can play a stabilizing role even when external market conditions remain difficult. The report also highlights the importance of addressing structural issues, including tax policy, energy reliability, and export facilitation, to sustain long-term growth.
Overall, Pakistan’s manufacturing sector appears to be at a turning point, balancing the dual pressures of inflation and export weaknesses with rising domestic consumption and business confidence. The November 2025 PMI figures provide optimism that industrial output may continue to expand in the coming months, offering potential support to broader economic recovery efforts.
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