Key insights
- Pakistan's manufacturing PMI rose slightly in May, but high inflation and rising input costs, linked to Middle East tensions, are creating stagflationary risks. While export orders improved, domestic demand is weak, and business confidence has fallen. This suggests potential global supply chain disruptions and inflationary pressures that could indirectly impact US markets through commodity prices and geopolitical uncertainty.
Investing.com -- Pakistan’s manufacturing sector returned to growth in May, with the HBL Pakistan Manufacturing PMI rising to 50.9 from 49.9 in April, according to data released Tuesday by S&P Global.
The modest expansion came as new orders returned to growth territory, though the pace remained below the series average. Production volumes stabilised at the neutral 50.0 mark during the month, with output gains from improved orders offset by rising input costs and supplier delays.
Export orders grew at their fastest pace since February 2025, supported by improving confidence in international markets. However, domestic demand remained constrained by electricity load shedding and inflationary pressures.
Input price inflation accelerated to a 21-month high, with manufacturers citing higher raw material and fuel costs linked to tensions in the Middle East. In response, companies raised their selling prices markedly during May.
Employment levels declined for a consecutive month as manufacturers scaled back hiring amid softer demand conditions. Input buying contracted at its sharpest pace since October 2025, with companies choosing to run down inventories rather than procure inputs at elevated prices.
Business confidence regarding future output fell to the lowest level since the series began in May 2024. "Manufacturers pointed to persistent inflationary pressures and elevated raw material costs as key risks to the outlook," said Humaira Qamar at HBL.
Delivery times for inputs lengthened markedly during May, though less than in April, as higher fuel and transportation costs limited availability.
The data, compiled from responses by around 300 manufacturers between May 12-22, pointed to what Qamar described as "signs of stagflation emanating from the ongoing US-Iran frictions."
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