Pakistan’s factory PMI dips in early sign of global tariff headwinds

KARACHI: Pakistan’s manufacturing sector growth cooled to its weakest pace in seven months in April, with the HBL Pakistan Manufacturing Purchasing Managers’ Index (PMI) slipping to 51.9 from 52.7 in March, HBL said in a press release.

The decline reflects mounting global trade pressures, notably the fallout from US President Donald Trump’s trade tariffs, said Head of Equities & Research at HBL Humaira Qamar. New orders slowed, with export orders dropping sharply. Employment also contracted for the second consecutive month as manufacturers trimmed costs.

Qamar warned that any stagflation in the US would hit Pakistan’s exports hard, particularly as the US accounts for 18 per cent of the country’s total exports. However, she noted that easing commodity prices could offer some respite.

Despite the deceleration, the PMI remained above the neutral 50 mark, signalling ongoing expansion against a backdrop of moderating inflation. Qamar said deflationary pressures support the case for an interest rate cut at the upcoming monetary policy meeting on Monday. However, a Reuters poll indicated that the State Bank of Pakistan is expected to keep rates unchanged at 12 per cent, following its surprise pause at the last meeting due to geopolitical tensions and inflation risks.

Pakistan’s annual inflation rate dropped to 0.3 per cent in April, well below the Ministry of Finance’s forecast of 1.5-2 per cent. The central bank projects average inflation of 5.5 to 7.5 per cent for the fiscal year ending in June.The PMI, jointly launched by HBL and S&P Global in February, tracks manufacturing sector trends in Pakistan.