HBL PMI: weaker new orders weigh on manufacturing activity

The HBL Pakistan Manufacturing PMI eased to 50.9 in September from 51.8 in August, marking the slowest expansion in manufacturing activity in three months. Growth moderated amid the ongoing impact of Middle East tensions filtering through the domestic economy. 

Demand conditions weakened during the month, with new orders contracting for the first time since June amid elevated fuel prices and pressure on household purchasing power. Export orders, however, provided some support, extending their growth streak to a fifth consecutive month. Despite softer demand, manufacturers increased purchasing activity at the fastest pace in seven months, reflecting efforts to strengthen inventory levels and safeguard against potential supply disruptions.

Inflationary signals remained mixed during the month. Although input price inflation continued to moderate through September, fuel prices remained a key source of cost pressure, prompting manufacturers to pass higher operating costs on to consumers. This resulted in an acceleration in selling price inflation, reinforcing the view that price pressures may be becoming more broad-based. With Middle East tensions continuing to keep global oil and transportation costs elevated, risks to the inflation outlook remain tilted to the upside.

Humaira Qamar, Head of Equities & Research – HBL, noted “Interestingly, business confidence strengthened to its highest level in 2026, supported by expectations of stronger demand and improved sales. However, the combination of weaker domestic orders and faster selling price growth highlights the recovery’s vulnerability to a sustained stalemate in US-Iran talks. Ultimately, we believe that the trajectory of manufacturing activity and the broader economy will remain closely tied to developments in the Middle East, where the prospects for a durable solution remain elusive.”