HBL Pakistan Manufacturing PMI increased slightly to 51.8 in August 2026 from 51.7 in July, reaching its highest level since the onset of the war. Although the manufacturing sector continued to expand at a modest pace, the latest reading pointed to improving underlying demand conditions. The improvement was supported by stronger domestic orders and continued growth in export demand, providing manufacturers with a more positive operating environment.
New orders recorded their fastest expansion in five months during August, reflecting improvements in product quality and competitive pricing strategies adopted by manufacturers. The increase in domestic demand contributed to the overall improvement in manufacturing activity, while export orders also continued to strengthen. Export demand expanded for the fourth consecutive month, indicating continued resilience in external markets and providing additional support to manufacturing businesses.
The stronger order environment helped maintain manufacturing output during the month. Output increased at a pace broadly similar to July, showing that producers were able to maintain activity despite continuing cost pressures. However, manufacturers remained cautious about significantly increasing production as inflationary pressures continued to affect operating conditions. Businesses therefore balanced the improvement in demand with the need to manage costs carefully.
Purchasing activity among manufacturers increased for the third consecutive month in August. Companies also continued to build inventories in preparation for expectations of stronger demand in the period ahead. The increase in purchasing activity and inventory accumulation suggests that businesses were preparing their operations to respond to improving order volumes while maintaining sufficient supplies for future production requirements.
Employment levels remained largely unchanged during the month. While some manufacturers undertook selective hiring to meet higher order volumes, these additions were balanced by continued cost management measures. This resulted in broadly stable employment across the manufacturing sector despite the improvement in demand and orders.
Supply chain conditions also improved further in August. Delivery delays eased to their lowest level since November 2025, providing manufacturers with better access to inputs and supporting smoother business operations. The improvement in supplier delivery performance came alongside stronger purchasing activity and inventory building, giving businesses more favorable conditions for managing production requirements.
Commenting on the latest PMI data, Humaira Qamar, Head of Equities and Research at HBL, said business confidence regarding output over the next 12 months strengthened in August and reached one of the highest levels recorded during the year. She said the improved optimism was supported by expectations of sustained sales growth and a moderation in price pressures.
Qamar also said inflation is expected to moderate through the second half of FY27, although the disinflationary process is likely to be more gradual and less pronounced than previously anticipated. This outlook remains an important consideration for manufacturers as they assess future production, purchasing and employment decisions.
The August PMI reading indicates that Pakistan’s manufacturing sector continued to expand while benefiting from stronger domestic and external demand. Rising new orders, consecutive growth in export orders, increased purchasing activity and improving supply chain conditions provided support to manufacturers during the month. At the same time, businesses continued to manage inflationary and cost pressures carefully, keeping production growth and employment expansion relatively measured.
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