The HBL Pakistan Manufacturing PMI rose to 51.7 in July 2026 from 50.8 in June, marking the strongest improvement in manufacturing conditions in four months. The expansion was driven by a recovery in domestic demand alongside continued resilience in export orders. While manufacturing activity strengthened during the month, the pace of growth remained moderate, highlighting a gradual recovery amid elevated risks stemming from the renewed conflict in the Middle East.
New orders picked up after contracting in June, supported by stronger customer sentiment and competitive pricing. The improvement drove the fastest expansion in manufacturing output in five months and prompted firms to increase purchasing activity and employment for the first time since March. Although export orders continued to underpin overall activity, their relative contribution softened as domestic demand emerged as the primary catalyst for the sector’s ongoing recovery. Encouragingly, the improvement in demand was accompanied by easing inflationary pressures, as both input cost and output price inflation moderated despite persistent increases in raw material and fuel costs.
Commenting on the latest PMI data, Humaira Qamar, Head of Equities & Research – HBL, noted “The softer cost environment aligns with our expectation of a gradual disinflationary trend through FY27, although elevated geopolitical risks continue to cloud the near-term outlook. Against this backdrop, the State Bank’s decision to keep the policy rate unchanged at 11.5% strikes an appropriate balance between supporting economic recovery and anchoring inflation expectations. Looking ahead, a sustained improvement in manufacturing activity will depend on policy consistency and a stable external environment that supports both domestic demand and export growth.”
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