Karachi May 3 2025: Pakistan’s manufacturing sector saw new order growth ease during April, with the rate of expansion reaching its lowest point since last September.
Softer growth occurred amid a contraction in new export orders, the first since data collection began in May 2024, albeit one that was only fractional. Positively, firms were able to maintain solid growth in production volumes, partly due to the completion of outstanding business. Capacity pressures remained muted, as firms reduced employment for the second consecutive month amid reports of company downsizing and cost-cutting efforts. Manufacturing firms also indicated that these factors had influenced their efforts to secure and store advance purchases of raw materials.
Price pressures remained marked during April, as the pace of input cost inflation quickened compared to March. In turn, output charges also rose at a sharper rate.
The seasonally adjusted HBL Pakistan Manufacturing Purchasing Managers’ Index™ (PMI®), compiled by S&P Global, remained above the neutral 50.0 mark in April, posting a reading of 51.9, down from 52.7 in March. This index reading indicates a modest improvement in the health of the sector, but one that is the least pronounced in seven months.
New order growth continued at a moderate rate at the start of the second quarter; however, the rate of expansion eased again, reaching its lowest level since September 2024. Firms mentioned that lower electricity prices and sustained client confidence aided sales; however, load shedding and higher raw material prices weighed on demand over the month. Moreover, goods producers pointed to a moderation in new export orders during April, the first since the series began last May. According to panel respondents, border disruptions and tariff implementations contributed to the decline in foreign demand.
For the twelfth consecutive month, manufacturing production rose in April. The rate of growth was solid but only slightly changed from that seen in March. Growth in output was also partly sustained by the completion of outstanding business, with the rate of backlog depletion remaining sharp and only slightly above March’s series low.
Manufacturers often noted that higher cost burdens were a key factor behind the slowdown in new order growth. Input prices continued to rise at a strong rate, gathering momentum for the first time in three months. Anecdotal evidence suggested that rising raw material prices and tax burdens placed pressure on expenses, while a stronger US dollar pushed up the prices of imported inputs. Consequently, manufacturers increased selling prices at a quicker and solid pace.
Pakistani manufacturing firms lowered their staffing levels for the second consecutive month in April, though only at a marginal rate overall. Firms often mentioned that company downsizing had led to staff reductions, though there was also evidence that workforces were reduced as part of cost-saving efforts.
Goods producers increased their purchasing activity moderately in April, though the rate of accumulation was the softest since the series began. According to respondents, higher input buying reflected production requirements and advance purchasing; however, anecdotal evidence also indicated that purchases were somewhat constrained by higher raw material prices and softer demand conditions
Advance purchasing encouraged firms to raise their stocks of inputs during April, while softer sales also contributed to the preparation of future stock, resulting in increased holdings of post-production inventories.
Manufacturers also noted a further deterioration in supplier performance in the latest survey period. Average delivery times lengthened in each of the 12 months of the series so far, though the latest lengthening was the least pronounced of all. Road traffic challenges, higher fuel costs, and disruptive protests were cited as key factors behind the delays.
Companies continued to express confidence regarding the future path for output. The degree of optimism was marked and strengthened compared to March. Confidence was underpinned by hopes of further reductions in raw material and utility costs, as well as a general macroeconomic improvement that would drive new product launches and sales.
