Key insights
- Pakistan's manufacturing PMI slowed in March due to rising inflation, which hit a 19-month high. Input costs and selling prices increased, while supplier delivery times deteriorated. Business confidence fell to its lowest since May 2024. This news has a slightly negative impact on US equities as it reflects global inflationary pressures and supply chain disruptions, potentially impacting multinational corporations with operations or supply chains in Pakistan.
Investing.com -- Pakistan’s manufacturing sector expanded at a slower pace in March as rising inflation pressured output growth, according to the HBL Pakistan Manufacturing PMI released Wednesday.
The seasonally adjusted PMI fell to 52.9 in March from 53.6 in February, marking a softer improvement in manufacturing conditions. A reading above 50 indicates expansion.
Production levels rose at the second-weakest rate in the current five-month growth sequence. Survey respondents said higher inflationary pressures weighed on the boost to production from greater new order intakes.
New orders increased for the fifth consecutive month but at a slower pace than February. Improvements in product quality and client confidence drove the expansion. New export sales rose for the second straight month, with the pace of growth reaching the fastest in a year.
Input costs climbed at a marked rate amid higher raw material and fuel prices, alongside increased tax burdens. Manufacturers raised selling prices at the steepest pace since August 2024, with output price inflation reaching a 19-month high.
Supplier delivery times deteriorated more than in February. Companies reported that higher transport and fuel costs disrupted supplier capacity and material availability.
Employment levels rose for the second successive month, though the pace of hiring weakened as slower output and order growth limited recruitment.
Backlogs of work fell for the fifteenth straight month at a steep rate. Anecdotal reports indicated that electricity load shedding prompted firms to prioritize completing existing orders before starting new work.
Post-production inventories rose at the most pronounced rate since May 2024 as firms built safety stocks of finished items.
Business confidence regarding output over the coming year fell to the lowest since the series began in May 2024. Kumail Chevelwalla at HBL said concerns about the sustainability of demand conditions amid persistent inflationary pressures weighed on sentiment.
Chevelwalla noted that the slowdown reflected nascent signs of the US-Iran war’s toll on Pakistan’s economy. He said risks are skewed towards a rate hike in the near term given evidence of higher energy costs spilling over into broad-based inflation.
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